##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark one)

|     |  |                                                                                        
|---- |  | ---------------------------------------------------------------------------------------
|XBOX |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

OR

|    |  |                                                                                         
|--- |  | ----------------------------------------------------------------------------------------
|BOX |  | 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 001-07155

R.H. DONNELLEY CORPORATION

(Exact name of registrant as specified in its charter)

|                                         |  |                                     
|---------------------------------------- |  | ------------------------------------
|Delaware                                 |  | 13-2740040                          
|                                         |  |                                     
|(State of Incorporation)                 |  | (I.R.S. Employer Identification No.)
|                                        
|                                        
|                                        
|                                        
|                                         |  |                                     
|                                        
|                                        
|                                        
|                                        
|One Manhattanville Road, Purchase N.Y    |  | 10577                               
|                                         |  |                                     
|(Address of principal executive offices) |  | (Zip Code)                          

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   YesXBOX    NoBOX

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date:

|                                     |  |                                      |            | 
|------------------------------------ |  | ------------------------------------ | ---------- | 
|Title of Class                       |  | Shares Outstanding at August 1, 2002
|Common Stock, par value $1 per share |  |                                      | 29,708,558 | 

Commission file number 333-59287

R.H. DONNELLEY INC. *

(Exact name of registrant as specified in its charter)

|                                         |  |                                     
|---------------------------------------- |  | ------------------------------------
|Delaware                                 |  | 36-2467635                          
|                                         |  |                                     
|(State of Incorporation)                 |  | (I.R.S. Employer Identification No.)
|                                        
|                                        
|                                        
|                                        
|                                         |  |                                     
|                                        
|                                        
|                                        
|                                        
|One Manhattanville Road, Purchase N.Y    |  | 10577                               
|                                         |  |                                     
|(Address of principal executive offices) |  | (Zip Code)                          

|                                                   |  |               
|-------------------------------------------------- |  | --------------
|Registrants telephone number, including area code |  | (914) 933-6400
|                                                   |  |               

     R.H. Donnelley Inc. is a wholly owned subsidiary of R.H. Donnelley
Corporation. R.H. Donnelley Inc. meets the conditions set forth in General
Instructions H 1(a) and (b) of Form 10-Q and is therefore filing this report
with respect to R.H. Donnelley Inc. with the reduced disclosure format. R.H.
Donnelley Inc. became subject to the filing requirements of Section 15(d) on
October 1, 1998 in connection with the public offer and sale of its 9 1/8%
Senior Subordinated Notes. As of August 1, 2002, 100 shares of R.H. Donnelley
Inc. common stock, no par value, were outstanding.





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TABLE OF CONTENTS



|                                             |                                                                                               |                                                        |  |  |  |  |  | 
|-------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------ |  |  |  |  |  | 
|Part I. Financial Information               
|                                             | Item 1. Financial Statemtments                                                               
|                                             |                                                                                               | Consolidated Statements of Operations (Unaudited)     
|                                             |                                                                                               | Consolidated Balance Sheets (Unaudited)               
|                                             |                                                                                               | Consolidated Statements of Cash Flows (Unaudited)     
|                                             |                                                                                               | Notes to Consolidated Financial Statements (Unaudited)
|                                             | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                             | Item 3. Quantitative and Qualitative Disclosure About Market Risk                            
|PART II. OTHER INFORMATION                  
|                                             | Item 1. Legal Proceedings                                                                    
|                                             | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                                             | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                  
|LIMITED LIABILITY COMPANY AGREEMENT         
|SALES AGENCY AGREEMENT                      
|AGREEMENT FOR PUBLISHING SERVICES           
|EMPLOYMENT AGREEMENT                        
|EMPLOYMENT AGREEMENT FOR STEVEN M. BLONDY   
|CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
|CERTIFICATION OF THE CHIEF FINANCIAL OFFICER



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##### Table of Contents



R.H. DONNELLEY CORPORATION

INDEX TO FORM 10-Q

|                                                                                              |                                                                                                 |  |      |   | 
|--------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- |  | ---- | - | 
|                                                                                              |                                                                                                 |  | PAGE
|                                                                                              |                                                                                                 |  |     
|PART I. FINANCIAL INFORMATION                                                                 |                                                                                                 |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 1. Financial Statements (Unaudited)                                                      |                                                                                                 |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                                                                 |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Consolidated Statements of Operations for the three and six months ended
June 30, 2002 and 2001 |  |      | 3 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                                                                 |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Consolidated Balance Sheets at June 30, 2002 and December 31, 2001                              |  |      | 4 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                                                                 |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Consolidated Statements of Cash Flows for the six months ended June 30,
2002 and 2001           |  |      | 5 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                                                                 |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Notes to Consolidated Financial Statements                                                      |  |      | 6 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                                                                 |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 2. Managements
Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                 |  | 12   |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                                                                 |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 3. Quantitative and Qualitative Disclosure About Market Risk                             |                                                                                                 |  | 22   |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                                                                 |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|PART II. OTHER INFORMATION                                                                    |                                                                                                 |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                                                                 |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 1. Legal Proceedings                                                                     |                                                                                                 |  | 23   |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                                                                 |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 4. Submission of Matters to a Vote of Security Holders                                   |                                                                                                 |  | 23   |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                                                                 |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                 |  | 24   |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                                                                 |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|SIGNATURES                                                                                    |                                                                                                 |  | 29   |  

2



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##### Table of Contents












R.H. Donnelley Corporation and Subsidiaries
Consolidated Statements of Operations (Unaudited)

|                                                          |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |        |        | 
|--------------------------------------------------------- | ----------------------------------- | ------------------------------------------------- | ------ | ------------------ | ------ | ---------------- | ------ | ------ | ------ | - | ------- | ------ | ------ | - | ------- | ------ | ------ | 
|                                                          |                                     |                                                   |        | Three months ended |        | Six months ended
|                                                          |                                     |                                                   |        | June 30,           |        | June 30,        
|                                                          |                                     |                                                   |        |                    |        |                 
|(amounts in thousands, except per share data)             |                                     | 2002                                              |        | 2001               |        | 2002             |        | 2001  
|                                                          |                                     |                                                   |        |                    |        |                  |        |       
|Gross revenue                                             |                                     | $                                                 | 19,593 |                    |        | $                | 20,342 |        |        | $ | 38,047  |        |        | $ | 39,532  |       
|                                                         
|                                                         
|                                                         
|                                                         
|Less: sales allowances                                    |                                     |                                                   | (137   | )                  |        |                  | (308   | )      |        |   | (202    | )      |        |   | (659    | )     
|                                                          |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|                                                          |                                     | Net revenue                                       |        |                    | 19,456 |                  |        |        | 20,034 |   |         |        | 37,845 |   |         |        | 38,873 | 
|                                                         
|                                                         
|                                                         
|                                                         
|Expenses                                                  |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Operating expenses                  |                                                   |        | 13,650             |        |                  |        | 14,269 |        |   |         | 24,879 |        |   |         | 25,437 |       
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | General and administrative expenses |                                                   |        | 4,502              |        |                  |        | 5,013  |        |   |         | 9,547  |        |   |         | 9,160  |       
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Depreciation and amortization       |                                                   |        | 1,557              |        |                  |        | 2,755  |        |   |         | 3,164  |        |   |         | 5,640  |       
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Restructuring and special charge    |                                                   |        | 218                |        |                  |        |       |        |   |         | 218    |        |   |         |       |       
|                                                          |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|                                                          |                                     | Total expenses                                    |        |                    | 19,927 |                  |        |        | 22,037 |   |         |        | 37,808 |   |         |        | 40,237 | 
|                                                         
|                                                         
|                                                         
|                                                         
|Partnership and joint venture income                      |                                     |                                                   | 40,864 |                    |        |                  | 41,211 |        |        |   | 68,012  |        |        |   | 68,235  |       
|                                                          |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|                                                          |                                     | Operating income                                  |        |                    | 40,393 |                  |        |        | 39,208 |   |         |        | 68,049 |   |         |        | 66,871 | 
|                                                         
|                                                         
|                                                         
|                                                         
|Interest income                                           |                                     |                                                   | 60     |                    |        |                  | 270    |        |        |   | 171     |        |        |   | 1,546   |       
|                                                         
|                                                         
|                                                         
|                                                         
|Interest expense                                          |                                     |                                                   | (5,977 | )                  |        |                  | (6,498 | )      |        |   | (12,024 | )      |        |   | (14,300 | )     
|                                                          |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|                                                          |                                     | Income before income taxes and extraordinary loss |        |                    | 34,476 |                  |        |        | 32,980 |   |         |        | 56,196 |   |         |        | 54,117 | 
|                                                         
|                                                         
|                                                         
|                                                         
|Provision for income taxes                                |                                     |                                                   | 13,273 |                    |        |                  | 12,368 |        |        |   | 21,635  |        |        |   | 20,294  |       
|                                                          |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|                                                          |                                     | Income before extraordinary loss                  |        |                    | 21,203 |                  |        |        | 20,612 |   |         |        | 34,561 |   |         |        | 33,823 | 
|                                                         
|                                                         
|                                                         
|                                                         
|Extraordinary loss, net of tax                            |                                     |                                                   | 34     |                    |        |                  |       |        |        |   | 210     |        |        |   | 348     |       
|                                                          |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|                                                          |                                     | Net income                                        |        | $                  | 21,169 |                  |        | $      | 20,612 |   |         | $      | 34,351 |   |         | $      | 33,475 | 
|                                                          |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|Earnings per share before extraordinary loss              |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                     | Basic                                             |        | $                  | 0.71   |                  |        | $      | 0.68   |   |         | $      | 1.17   |   |         | $      | 1.10   | 
|                                                          |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|                                                          |                                     | Diluted                                           |        | $                  | 0.70   |                  |        | $      | 0.66   |   |         | $      | 1.14   |   |         | $      | 1.07   | 
|                                                          |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|Earnings per share after extraordinary loss               |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                     | Basic                                             |        | $                  | 0.71   |                  |        | $      | 0.68   |   |         | $      | 1.16   |   |         | $      | 1.09   | 
|                                                          |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|                                                          |                                     | Diluted                                           |        | $                  | 0.70   |                  |        | $      | 0.66   |   |         | $      | 1.14   |   |         | $      | 1.06   | 
|                                                          |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|Shares used in computing earnings per share               |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                     | Basic                                            
|                                                          |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                     | Diluted                                           |        |                    | 30,415 |                  |        |        | 31,465 |   |         |        | 30,265 |   |         |        | 31,580 | 
|                                                          |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|Comprehensive Income:                                     |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|                                                         
|                                                         
|                                                         
|                                                         
|Net income                                                |                                     | $                                                 | 21,169 |                    |        | $                | 20,612 |        |        | $ | 34,351  |        |        | $ | 33,475  |       
|                                                         
|                                                         
|                                                         
|                                                         
|Unrealized gain (loss) on interest rate swaps, net of tax |                                     |                                                   | 101    |                    |        |                  | 152    |        |        |   | (1,561  | )      |        |   | (2,291  | )     
|                                                          |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       
|                                                         
|                                                         
|                                                         
|                                                         
|Comprehensive income                                      |                                     | $                                                 | 21,270 |                    |        | $                | 20,764 |        |        | $ | 32,790  |        |        | $ | 31,184  |       
|                                                          |                                     |                                                   |        |                    |        |                  |        |        |        |   |         |        |        |   |         |       

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

3



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##### Table of Contents






R.H. Donnelley Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)

|                                                |                                                                                                                                   |                                                      |                                             |                                       |        |          |   |              |        |          |   | 
|----------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | ------------------------------------------- | ------------------------------------- | ------ | -------- | - | ------------ | ------ | -------- | - | 
|                                                |                                                                                                                                   |                                                      |                                             |                                       |        | June 30, |   | December 31,
|                                                |                                                                                                                                   |                                                      |                                             |                                       |        | 2002     |   | 2001        
|(in thousands, except share and per share data) |                                                                                                                                   |                                                      |                                             |                                      
|                                                |                                                                                                                                   |                                                      |                                             | Assets                                |        |          |   |              |        |          |   | 
|                                               
|                                               
|                                               
|                                               
|Current Assets                                  |                                                                                                                                   |                                                      |                                             |                                       |        |          |   |             
|                                               
|                                               
|                                               
|                                               
|                                                | Cash and cash equivalents                                                                                                         |                                                      | $                                           | 2,427                                 |        |          | $ | 14,721       |       
|                                               
|                                               
|                                               
|                                               
|                                                | Accounts receivable
Trade                                                                                                         |                                                      |                                             | 34,258                                |        |          |   | 29,240       |       
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                                                                   | Other                                                |                                             |                                       | 3,310  |          |   |              | 4,121  |         
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                                                                   | Allowance for doubtful accounts and sales allowances |                                             |                                       | (5,899 | )        |   |              | (4,189 | )       
|                                                |                                                                                                                                   |                                                      |                                             |                                       |        |          |   |             
|                                                |                                                                                                                                   |                                                      | Net accounts receivable                     |                                       |        | 31,669   |   |              |        | 29,172   |  
|                                               
|                                               
|                                               
|                                               
|                                                | Other current assets                                                                                                              |                                                      |                                             | 846                                   |        |          |   | 2,275        |       
|                                                |                                                                                                                                   |                                                      |                                             |                                       |        |          |   |             
|                                                |                                                                                                                                   |                                                      | Total current assets                        |                                       |        | 34,942   |   |              |        | 46,168   |  
|                                               
|                                               
|                                               
|                                               
|                                                | Fixed assets and computer software  net                                                                                          |                                                      |                                             | 12,651                                |        |          |   | 14,514       |       
|                                               
|                                               
|                                               
|                                               
|                                                | Partnership and joint venture investments                                                                                         |                                                      |                                             | 203,825                               |        |          |   | 208,989      |       
|                                               
|                                               
|                                               
|                                               
|                                                | Prepaid pension                                                                                                                   |                                                      |                                             | 21,756                                |        |          |   | 20,956       |       
|                                               
|                                               
|                                               
|                                               
|                                                | Other non-current assets                                                                                                          |                                                      |                                             | 7,718                                 |        |          |   | 7,504        |       
|                                                |                                                                                                                                   |                                                      |                                             |                                       |        |          |   |             
|                                                |                                                                                                                                   |                                                      | Total Assets                                |                                       | $      | 280,892  |   |              | $      | 298,131  |  
|                                                |                                                                                                                                   |                                                      |                                             |                                       |        |          |   |             
|                                                |                                                                                                                                   |                                                      |                                             | Liabilities and Shareholders Deficit |        |          |   |              |        |          |   | 
|                                               
|                                               
|                                               
|                                               
|Current Liabilities                             |                                                                                                                                   |                                                      |                                             |                                       |        |          |   |             
|                                               
|                                               
|                                               
|                                               
|                                                | Accounts payable and accrued liabilities                                                                                          |                                                      | $                                           | 22,220                                |        |          | $ | 22,368       |       
|                                               
|                                               
|                                               
|                                               
|                                                | Restructuring and other related liabilities                                                                                       |                                                      |                                             | 5,547                                 |        |          |   | 16,357       |       
|                                               
|                                               
|                                               
|                                               
|                                                | Accrued interest payable                                                                                                          |                                                      |                                             | 3,399                                 |        |          |   | 5,163        |       
|                                               
|                                               
|                                               
|                                               
|                                                | Current portion of long-term debt                                                                                                 |                                                      |                                             | 2,632                                 |        |          |   | 2,846        |       
|                                                |                                                                                                                                   |                                                      |                                             |                                       |        |          |   |             
|                                                |                                                                                                                                   |                                                      | Total current liabilities                   |                                       |        | 33,798   |   |              |        | 46,734   |  
|                                               
|                                               
|                                               
|                                               
|                                                | Long-term debt                                                                                                                    |                                                      |                                             | 241,618                               |        |          |   | 283,904      |       
|                                               
|                                               
|                                               
|                                               
|                                                | Long-term restructuring liability                                                                                                 |                                                      |                                             | 2,821                                 |        |          |   | 4,934        |       
|                                               
|                                               
|                                               
|                                               
|                                                | Deferred income taxes  net                                                                                                       |                                                      |                                             | 52,944                                |        |          |   | 52,632       |       
|                                               
|                                               
|                                               
|                                               
|                                                | Postretirement and postemployment benefits                                                                                        |                                                      |                                             | 7,269                                 |        |          |   | 7,431        |       
|                                               
|                                               
|                                               
|                                               
|                                                | Other non-current liabilities                                                                                                     |                                                      |                                             | 12,996                                |        |          |   | 13,809       |       
|                                               
|                                               
|                                               
|                                               
|Commitments and contingencies                   |                                                                                                                                   |                                                      |                                             |                                       |        |          |   |             
|                                               
|                                               
|                                               
|                                               
|Shareholders Deficit                           |                                                                                                                                   |                                                      |                                             |                                       |        |          |   |             
|                                               
|                                               
|                                               
|                                               
|                                                | Preferred stock, par value $1 per share, authorized 10,000,000
shares; outstanding  none                                        |                                                      |                                             |                                      |        |          |   |             |       
|                                               
|                                               
|                                               
|                                               
|                                                | Common stock, par value $1 per share, authorized  400,000,000 shares;
issued  51,621,894 shares for 2002 and 2001, respectively |                                                      |                                             | 51,622                                |        |          |   | 51,622       |       
|                                               
|                                               
|                                               
|                                               
|                                                | Additional paid-in capital                                                                                                        |                                                      |                                             | 39,131                                |        |          |   | 32,043       |       
|                                               
|                                               
|                                               
|                                               
|                                                | Unamortized restricted stock                                                                                                      |                                                      |                                             | (448                                  | )      |          |   | (336         | )     
|                                               
|                                               
|                                               
|                                               
|                                                | Retained earnings (deficit)                                                                                                       |                                                      |                                             | 5,481                                 |        |          |   | (28,870      | )     
|                                               
|                                               
|                                               
|                                               
|                                                | Treasury stock, at cost, 21,935,124 shares for 2002 and 22,231,910 shares for 2001                                                |                                                      |                                             | (164,779                              | )      |          |   | (163,442     | )     
|                                               
|                                               
|                                               
|                                               
|                                                | Accumulated other comprehensive loss                                                                                              |                                                      |                                             | (1,561                                | )      |          |   | (2,330       | )     
|                                               
|                                               
|                                               
|                                               
|                                                |                                                                                                                                   |                                                      | Total shareholders deficit                 |                                       |        | (70,554  | ) |              |        | (111,313 | )
|                                                |                                                                                                                                   |                                                      |                                             |                                       |        |          |   |             
|                                                |                                                                                                                                   |                                                      | Total Liabilities and Shareholders Deficit |                                       | $      | 280,892  |   |              | $      | 298,131  |  
|                                                |                                                                                                                                   |                                                      |                                             |                                       |        |          |   |             

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

4



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##### Table of Contents






R.H. Donnelley Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)

|                                                                           |              |                                                        |                                           |        |                  |         |         |        |         |         |  
|-------------------------------------------------------------------------- | ------------ | ------------------------------------------------------ | ----------------------------------------- | ------ | ---------------- | ------- | ------- | ------ | ------- | ------- | -
|                                                                           |              |                                                        |                                           |        | Six months ended
|                                                                           |              |                                                        |                                           |        | June 30,        
|                                                                           |              |                                                        |                                           |        |                 
|(amounts in thousands)                                                     |              | 2002                                                   |                                           | 2001  
|                                                                           |              |                                                        |                                           |       
|Cash Flows from Operating Activities                                       |              |                                                        |                                           |        |                  |         |         |       
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Net income                                                                 |              | $                                                      | 34,351                                    |        |                  | $       | 33,475  |       
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Reconciliation of net income to net cash provided by operating activities: |              |                                                        |                                           |        |                  |         |         |       
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |              | Extraordinary loss, net of tax                         |                                           |        | 210              |         |         |        | 348     |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |              | Depreciation and amortization                          |                                           |        | 3,164            |         |         |        | 5,640   |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |              | Deferred income tax                                    |                                           |        | 312              |         |         |        | (500    | )      
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |              | Provision for doubtful accounts                        |                                           |        | 1,467            |         |         |        | 1,599   |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |              | Other noncash charges                                  |                                           |        | 762              |         |         |        | 662     |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |              | Cash in excess of partnership and joint venture income |                                           |        | 5,164            |         |         |        | 9,148   |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |              | Increase in accounts receivable                        |                                           |        | (3,964           | )       |         |        | (1,543  | )      
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |              | (Increase) decrease in other assets                    |                                           |        | (413             | )       |         |        | 1,599   |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |              | Decrease in accounts payable and accrued liabilities   |                                           |        | (12,638          | )       |         |        | (17,204 | )      
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |              | (Decrease) increase in other non-current liabilities   |                                           |        | (207             | )       |         |        | 1,472   |        
|                                                                           |              |                                                        |                                           |        |                  |         |         |       
|                                                                           |              |                                                        | Net cash provided by operating activities |        |                  | 28,208  |         |        |         | 34,696  |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Cash Flows from Investing Activities                                       |              |                                                        |                                           |        |                  |         |         |       
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Additions to fixed assets and computer software                            |              |                                                        | (1,300                                    | )      |                  |         | (1,952  | )     
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Investment in ChinaBig.com Limited                                         |              |                                                        |                                          |        |                  |         | (1,550  | )     
|                                                                           |              |                                                        |                                           |        |                  |         |         |       
|                                                                           |              |                                                        | Cash used in investing activities         |        |                  | (1,300  | )       |        |         | (3,502  | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Cash Flows from Financing Activities                                       |              |                                                        |                                           |        |                  |         |         |       
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Repayment of debt                                                          |              |                                                        | (42,500                                   | )      |                  |         | (50,000 | )     
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Purchase of treasury stock                                                 |              |                                                        |                                          |        |                  |         | (32,538 | )     
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Proceeds from employee stock option exercises                              |              |                                                        | 3,298                                     |        |                  |         | 3,562   |       
|                                                                           |              |                                                        |                                           |        |                  |         |         |       
|                                                                           |              |                                                        | Net cash used in financing activities     |        |                  | (39,202 | )       |        |         | (78,976 | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |              |                                                        |                                           |        |                  |         |         |       
|Decrease in cash and cash equivalents                                      |              |                                                        | (12,294                                   | )      |                  |         | (47,782 | )     
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Cash and cash equivalents, beginning of year                               |              |                                                        | 14,721                                    |        |                  |         | 55,437  |       
|                                                                           |              |                                                        |                                           |        |                  |         |         |       
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Cash and cash equivalents, end of period                                   |              | $                                                      | 2,427                                     |        |                  | $       | 7,655   |       
|                                                                           |              |                                                        |                                           |        |                  |         |         |       
|Supplemental Information:                                                  |              |                                                        |                                           |        |                  |         |         |       
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Cash used to pay:                                                          |              |                                                        |                                           |        |                  |         |         |       
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Interest     |                                                        | $                                         | 12,647 |                  |         | $       | 12,292 |        
|                                                                           |              |                                                        |                                           |        |                  |         |         |       
|                                                                           | Income taxes |                                                        | $                                         | 16,566 |                  |         | $       | 21,867 |        
|                                                                           |              |                                                        |                                           |        |                  |         |         |       

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

5



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##### Table of Contents






R.H. Donnelley Corporation and Subsidiary
Notes to Consolidated Financial Statements (Unaudited)(amounts in thousands, except per share data)



|1. |  | Basis of Presentation
|-- |  | ---------------------

The interim financial statements have been prepared in accordance with the
instructions to Form 10-Q and should be read in conjunction with the financial
statements and related notes included in our Annual Report on Form 10-K for the
year ended December 31, 2001. The results of interim periods are not
necessarily indicative of results for the full year or any subsequent period.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of financial position,
results of operations and cash flows at the dates and for the periods presented
have been included. Certain prior year amounts have been reclassified to
conform to the current years presentation.



|2. |  | Significant Accounting Policies
|-- |  | -------------------------------

Principles of Consolidation.The consolidated financial statements include the
accounts of the Company and its direct and indirect wholly owned subsidiaries.
All intercompany transactions and balances have been eliminated. The financial
statements of the DonTech Partnership (DonTech), a 50/50 perpetual
partnership with an operating unit of SBC Communications Inc. (SBC), are not
consolidated with our financial statements. See Partnership and Joint Venture
Accounting below.

Revenue Recognition.We earn revenue in the form of commissions from the sale
of advertising on behalf of Sprint and fees from our pre-press publishing
services. As a sales agent for Sprint, we recognize sales commission revenue
at the time an advertising contract is executed with a customer. Sales
commission revenue is recorded net of potential sales allowances, which are
estimated, based on historical experience. Revenue from pre-press publishing
operations is recognized as services are performed. We recognize no allowances
for pre-press publishing services.

Partnership and Joint Venture Accounting.DonTech is accounted for under the
equity method whereby we recognize our 50% share of the net income of DonTech
as partnership and joint venture income. Partnership and joint venture income
also includes revenue participation income from SBC and the priority
distribution on our membership interest in CenDon LLC (CenDon), a joint
venture with Centel Directory Company (Centel), a subsidiary of Sprint
Corporation (Sprint). Revenue participation income and the priority
distribution are tied to advertising sales and recognized when a sales contract
is executed with a customer. Partnership and joint venture investments on the
consolidated balance sheets include our 50% share of the net assets of DonTech,
the revenue participation receivable and the priority distribution receivable.

Trade Receivables.Trade receivables represent sales commissions earned from
the sale of advertising on behalf of Sprint and fees earned for pre-press
publishing services. An allowance for doubtful accounts is recognized based
upon historical experience and subject to contractual limitations. Receivables
for sales commissions are billed to the publisher upon directory publication
and collected in accordance with contractual provisions, typically in the same
month of publication, but no later than nine months after publication.
Receivables for pre-press publishing services are billed and collected in
accordance with the terms of the applicable agreement, generally a monthly pro
rata amount based on the annual contract value. If actual volumes exceed
contracted volumes, an additional amount is billed to the publisher at
year-end.

Investment Impairment.We have an 18% interest in ChinaBig.com (ChinaBig),
which publishes yellow pages directories and offers Internet directory services
in the Peoples Republic of China. We account for this investment under the
cost method and the carrying value of this investment is reflected as other
non-current assets on the consolidated balance sheets. We evaluate the
carrying value of this investment for impairment whenever events or changes in
circumstances indicate that the carrying value may be impaired. Such events or
changes in circumstance may include (i) a change in the extent or manner in
which management intends to use the asset; (ii) a decrease in the market value
of the asset; (iii) an independent valuation of the asset or similar type asset
or (iv) a history of operating cash flow losses. If the investment is
determined to be impaired, and such impairment is determined to be permanent,
the carrying value would be written down to its fair value. As a quoted market
price does not exist for this investment, fair value would be determined based
other factors, including, but not limited to, an independent valuation,
discounted cash flow analysis or a transaction in the marketplace involving a
similar type investment.

Concentration of Credit Risk.We maintain significant receivable balances with
SBC and Sprint for revenue

6



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##### Table of Contents



participation, priority distribution and sales commissions. We do not
currently foresee a material credit risk associated with these receivables,
although there can be no assurance that full payment will be received on a
timely basis.

Income Taxes.We recognize deferred tax assets for items that will give rise
to future tax deductions. A valuation allowance is established where expected
future taxable income does not support the full realization of deferred tax
assets.



|3. |  | Partnership and Joint Venture Income
|-- |  | ------------------------------------

Partnership and joint venture income for the three and six months ended June
30, 2002 and 2001 consisted of the following:

|                                     |                      |   |                    |        |                  |   |        |        |      |   |        |        |  |   |        |        | 
|------------------------------------ | -------------------- | - | ------------------ | ------ | ---------------- | - | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                                     |                      |   | Three months ended |        | Six months ended
|                                     |                      |   | June 30,           |        | June 30,        
|                                     |                      |   |                    |        |                 
|                                     |                      |   | 2002               |        | 2001             |   | 2002   |        | 2001
|                                     |                      |   |                    |        |                  |   |        |        |     
|Revenue participation income         |                      | $ | 29,882             |        |                  | $ | 29,992 |        |      | $ | 49,300 |        |  | $ | 50,165 |       
|                                    
|                                    
|                                    
|                                    
|50% share of DonTech net income      |                      |   | 6,745              |        |                  |   | 7,093  |        |      |   | 9,232  |        |  |   | 8,919  |       
|                                     |                      |   |                    |        |                  |   |        |        |      |   |        |        |  |   |        |       
|                                     | Total DonTech income |   |                    | 36,627 |                  |   |        | 37,085 |      |   |        | 58,532 |  |   |        | 59,084 | 
|                                    
|                                    
|                                    
|                                    
|Priority distribution income         |                      |   | 4,237              |        |                  |   | 4,126  |        |      |   | 9,480  |        |  |   | 9,151  |       
|                                     |                      |   |                    |        |                  |   |        |        |      |   |        |        |  |   |        |       
|Partnership and joint venture income |                      | $ | 40,864             |        |                  | $ | 41,211 |        |      | $ | 68,012 |        |  | $ | 68,235 |       
|                                     |                      |   |                    |        |                  |   |        |        |      |   |        |        |  |   |        |       

Summarized combined financial information of DonTech is shown in the table
below.

|                 |  |                    |        |                  |  |      |        |      |  |   |        |  |  |   |        | 
|---------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|                 |  | Three months ended |        | Six months ended
|                 |  | June 30,           |        | June 30,        
|                 |  |                    |        |                 
|                 |  | 2002               |        | 2001             |  | 2002 |        | 2001
|                 |  |                    |        |                  |  |      |        |     
|Net revenue      |  | $                  | 31,645 |                  |  | $    | 31,673 |      |  | $ | 52,284 |  |  | $ | 52,778 | 
|                
|                
|                
|                
|Operating income |  |                    | 13,468 |                  |  |      | 14,093 |      |  |   | 18,597 |  |  |   | 17,654 | 
|                
|                
|                
|                
|Net income       |  |                    | 13,489 |                  |  |      | 14,185 |      |  |   | 18,464 |  |  |   | 17,838 | 

Total assets of DonTech were $127,740 and $133,566 at June 30, 2002 and 2001,
respectively.



|4. |  | Long-term Debt
|-- |  | --------------

Long-term debt at June 30, 2002 consisted of $94,250 outstanding under the
Senior Secured Term Facilities (Term Facilities) and $150,000 Senior
Subordinated 91/8% Notes. We also have a Senior Revolving Credit Facility (the
Revolver), which allows us to borrow up to $100,000. There are no
outstanding borrowings under the Revolver as of June 30, 2002. During the six
month period ended June 30, 2002, we prepaid $42,500 of Term Facilities. In
connection with the prepayments, we recorded an after-tax extraordinary loss of
$210 relating to the write-off of related deferred financing costs.



|5. |  | Restructuring and Special Charge
|-- |  | --------------------------------

In 2001, we recorded a restructuring and special charge of $18,556 in
connection with executive management transition arrangements and restructuring
actions, including the relocation and consolidation of real estate facilities
and the elimination of approximately 100 positions associated with the
expiration of a pre-press publishing contract during 2002. Activity in the
restructuring and other related liability account through June 30, 2002 is
presented in the table below. There were no layoffs related to the
restructuring plan through June 30, 2002.

7



---



##### Table of Contents



|                                   |  |            |         |           |  |            |       |            |  |       |       |       |  |   |     |   |  |   |         |  
|---------------------------------- |  | ---------- | ------- | --------- |  | ---------- | ----- | ---------- |  | ----- | ----- | ----- |  | - | --- | - |  | - | ------- | -
|                                   |  | Executive  |         |           |  |            |       |            |  |       |       | Asset |  |   |     |  
|                                   |  | Management |         | Other     |  | Facilities |       | Write-offs |  |       |       |      
|                                   |  | Transition |         | Severance |  | Related    |       | and Other  |  | Total
|                                   |  |            |         |           |  |            |       |            |  |      
|Restructuring and special charge   |  | $          | 9,937   |           |  | $          | 3,252 |            |  | $     | 4,380 |       |  | $ | 987 |   |  | $ | 18,556  |  
|                                  
|                                  
|                                  
|                                  
|Reclass of related liabilities     |  |            | 2,735   |           |  |            |       |            |  |       |       |       |  |   |     |   |  |   | 2,735   |  
|                                   |  |            |         |           |  |            |       |            |  |       |       |       |  |   |     |   |  |   |         |  
|Balance at January 1, 2002         |  |            | 12,672  |           |  |            | 3,252 |            |  |       | 4,380 |       |  |   | 987 |   |  |   | 21,291  |  
|                                  
|                                  
|                                  
|                                  
|2002 activity                      |  |            |         |           |  |            |       |            |  |       |       |       |  |   |     |   |  |   |         |  
|                                  
|                                  
|                                  
|                                  
|Payments                           |  |            | (12,961 | )         |  |            | (79   | )          |  |       | (12   | )     |  |   | (89 | ) |  |   | (13,141 | )
|                                  
|                                  
|                                  
|                                  
|Current period expense (income)(1) |  |            | 289     |           |  |            |       |            |  |       |       |       |  |   | (71 | ) |  |   | 218     |  
|                                   |  |            |         |           |  |            |       |            |  |       |       |       |  |   |     |   |  |   |         |  
|Balance at June 30, 2002           |  | $          |        |           |  | $          | 3,173 |            |  | $     | 4,368 |       |  | $ | 827 |   |  | $ | 8,368   |  
|                                   |  |            |         |           |  |            |       |            |  |       |       |       |  |   |     |   |  |   |         |  
|Short-term                         |  | $          |        |           |  | $          | 2,849 |            |  | $     | 1,932 |       |  | $ | 766 |   |  | $ | 5,547   |  
|                                  
|                                  
|                                  
|                                  
|Long-term                          |  |            |         |           |  |            | 324   |            |  |       | 2,436 |       |  |   | 61  |   |  |   | 2,821   |  
|                                   |  |            |         |           |  |            |       |            |  |       |       |       |  |   |     |   |  |   |         |  
|Total                              |  | $          |        |           |  | $          | 3,173 |            |  | $     | 4,368 |       |  | $ | 827 |   |  | $ | 8,368   |  
|                                   |  |            |         |           |  |            |       |            |  |       |       |       |  |   |     |   |  |   |         |  



|(1) |  | Represents amounts paid in excess of (lower than) the amounts originally
provided for in the 2001 restructuring and special charge.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------
|   
|6.  |  | Earnings Per Share                                                                                                                 

The computation of basic and diluted earnings per share before extraordinary
loss and from net income for the quarter and six months ended June 30, 2002 and
2001 was as follows:

|                                                    |         |                                  |        |                    |        |                  |        |      |        |      |        |   |        |   |        |   |        |  
|--------------------------------------------------- | ------- | -------------------------------- | ------ | ------------------ | ------ | ---------------- | ------ | ---- | ------ | ---- | ------ | - | ------ | - | ------ | - | ------ | -
|                                                    |         |                                  |        | Three months ended |        | Six months ended
|                                                    |         |                                  |        | June 30,           |        | June 30,        
|                                                    |         |                                  |        |                    |        |                 
|                                                    |         |                                  |        | 2002               |        | 2001             |        | 2002 |        | 2001
|                                                    |         |                                  |        |                    |        |                  |        |      |        |     
|Income before extraordinary loss                    |         | $                                | 21,203 |                    |        | $                | 20,612 |      |        | $    | 34,561 |   |        | $ | 33,823 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Extraordinary loss, net of taxes                    |         |                                  | 34     |                    |        |                  |       |      |        |      | 210    |   |        |   | 348    |  
|                                                    |         |                                  |        |                    |        |                  |        |      |        |      |        |   |        |   |        |  
|                                                   
|                                                   
|                                                   
|                                                   
|Net income                                          |         | $                                | 21,169 |                    |        | $                | 20,612 |      |        | $    | 34,351 |   |        | $ | 33,475 |  
|                                                    |         |                                  |        |                    |        |                  |        |      |        |      |        |   |        |   |        |  
|Weighted average shares of common stock outstanding |         |                                  |        |                    |        |                  |        |      |        |      |        |   |        |   |        |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |         | Basic shares                     |        |                    | 29,692 |                  |        |      | 30,519 |      |        |   | 29,573 |   |        |   | 30,696 |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |         | Dilutive effect of stock options |        |                    | 723    |                  |        |      | 946    |      |        |   | 692    |   |        |   | 884    |  
|                                                    |         |                                  |        |                    |        |                  |        |      |        |      |        |   |        |   |        |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |         | Diluted shares                   |        |                    | 30,415 |                  |        |      | 31,465 |      |        |   | 30,265 |   |        |   | 31,580 |  
|                                                    |         |                                  |        |                    |        |                  |        |      |        |      |        |   |        |   |        |  
|Earnings per share                                  |         |                                  |        |                    |        |                  |        |      |        |      |        |   |        |   |        |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Basic   |                                  |        |                    |        |                  |        |      |        |      |        |   |        |   |        |   |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |         | Income before extraordinary loss |        | $                  | 0.71   |                  |        | $    | 0.68   |      |        | $ | 1.17   |   |        | $ | 1.10   |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |         | Extraordinary loss, net of taxes |        |                    | (0.00  | )                |        |      | (0.00  | )    |        |   | (0.01  | ) |        |   | (0.01  | )
|                                                    |         |                                  |        |                    |        |                  |        |      |        |      |        |   |        |   |        |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |         | Net income                       |        | $                  | 0.71   |                  |        | $    | 0.68   |      |        | $ | 1.16   |   |        | $ | 1.09   |  
|                                                    |         |                                  |        |                    |        |                  |        |      |        |      |        |   |        |   |        |  
|                                                    | Diluted |                                  |        |                    |        |                  |        |      |        |      |        |   |        |   |        |   |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |         | Income before extraordinary loss |        | $                  | 0.70   |                  |        | $    | 0.66   |      |        | $ | 1.14   |   |        | $ | 1.07   |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |         | Extraordinary loss, net of taxes |        |                    | (0.00  | )                |        |      | (0.00  | )    |        |   | (0.00  | ) |        |   | (0.01  | )
|                                                    |         |                                  |        |                    |        |                  |        |      |        |      |        |   |        |   |        |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |         | Net income                       |        | $                  | 0.70   |                  |        | $    | 0.66   |      |        | $ | 1.14   |   |        | $ | 1.06   |  
|                                                    |         |                                  |        |                    |        |                  |        |      |        |      |        |   |        |   |        |  



|7. |  | Business Segments
|-- |  | -----------------

Our reportable operating segments are DonTech and Directory Advertising
Services (DAS). We evaluate the performance of DonTech and DAS primarily
based on operating income contribution. The DonTech segment includes revenue
participation income and our 50% interest in the net profits of DonTech (see
Note 3), but does not include an allocation of certain expenses incurred to
support this business. Our DAS segment includes revenue and income from our
sales agency and joint venture relationships with affiliates of Sprint, our
pre-press publishing services operation and our information technology
function, as well as an allocation of certain shared expenses based on
estimated

8



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##### Table of Contents



business usage. General & Corporate represents overhead and administrative
costs not allocated to the DAS business units. Interest expense, interest
income, income tax expense and other non-operating items are not allocated to
the operating segments. Segment information for the quarter and six months
ended June 30, 2002 and 2001 is as follows:

|                                 |  |             |         |             |  |           |        |          |  |        |        |              |  |   |      |   |  |   |         | 
|-------------------------------- |  | ----------- | ------- | ----------- |  | --------- | ------ | -------- |  | ------ | ------ | ------------ |  | - | ---- | - |  | - | ------- | 
|                                 |  |             |         |             |  | Directory |        |          |  |        |        |              |  |   |      |   |  |  
|                                 |  | DonTech     |         | Advertising |  | General & |        |          |  |        |        | Consolidated
|                                 |  | Partnership |         | Services    |  | Corporate |        | Other(1) |  | Totals
|                                 |  |             |         |             |  |           |        |          |  |       
|Three Months Ended June 30, 2002 |  |             |         |             |  |           |        |          |  |        |        |              |  |   |      |   |  |   |         | 
|                                
|                                
|                                
|                                
|Net revenue                      |  |             |        |             |  | $         | 19,456 |          |  |        |       |              |  |   |     |   |  | $ | 19,456  | 
|                                
|                                
|                                
|                                
|Operating income (loss)          |  | $           | 36,627  |             |  |           | 7,810  |          |  | $      | (3,826 | )            |  | $ | (218 | ) |  |   | 40,393  | 
|                                
|                                
|                                
|                                
|Depreciation and amortization    |  |             |        |             |  |           | 1,486  |          |  |        | 71     |              |  |   |     |   |  |   | 1,557   | 
|                                
|                                
|                                
|                                
|EBITDA(2)                        |  |             | 36,627  |             |  |           | 9,296  |          |  |        | (3,755 | )            |  |   | (218 | ) |  |   | 41,950  | 
|                                
|                                
|                                
|                                
|Total assets                     |  |             | 187,783 |             |  |           | 42,141 |          |  |        | 50,968 |              |  |   |     |   |  |   | 280,892 | 
|                                
|                                
|                                
|                                
|Three Months Ended June 30, 2001 |  |             |         |             |  |           |        |          |  |        |        |              |  |   |      |   |  |   |         | 
|                                
|                                
|                                
|                                
|Net revenue                      |  |             |        |             |  | $         | 20,034 |          |  |        |       |              |  |   |     |   |  | $ | 20,034  | 
|                                
|                                
|                                
|                                
|Operating income (loss)          |  | $           | 37,085  |             |  |           | 6,069  |          |  | $      | (3,946 | )            |  |   |     |   |  |   | 39,208  | 
|                                
|                                
|                                
|                                
|Depreciation and amortization    |  |             |        |             |  |           | 2,592  |          |  |        | 163    |              |  |   |     |   |  |   | 2,755   | 
|                                
|                                
|                                
|                                
|EBITDA(2)                        |  |             | 37,085  |             |  |           | 8,661  |          |  |        | (3,783 | )            |  |   |     |   |  |   | 41,963  | 
|                                
|                                
|                                
|                                
|Total assets                     |  |             | 194,790 |             |  |           | 42,940 |          |  |        | 78,318 |              |  |   |     |   |  |   | 316,048 | 
|                                
|                                
|                                
|                                
|Six Months Ended June 30, 2002   |  |             |         |             |  |           |        |          |  |        |        |              |  |   |      |   |  |   |         | 
|                                
|                                
|                                
|                                
|Net revenue                      |  |             |        |             |  | $         | 37,845 |          |  |        |       |              |  |   |     |   |  | $ | 37,845  | 
|                                
|                                
|                                
|                                
|Operating income (loss)          |  | $           | 58,532  |             |  |           | 17,585 |          |  | $      | (7,850 | )            |  | $ | (218 | ) |  |   | 68,049  | 
|                                
|                                
|                                
|                                
|Depreciation and amortization    |  |             |        |             |  |           | 3,017  |          |  |        | 147    |              |  |   |     |   |  |   | 3,164   | 
|                                
|                                
|                                
|                                
|EBITDA(2)                        |  |             | 58,532  |             |  |           | 20,602 |          |  |        | (7,703 | )            |  |   | (218 | ) |  |   | 71,213  | 
|                                
|                                
|                                
|                                
|Six Months Ended June 30, 2001   |  |             |         |             |  |           |        |          |  |        |        |              |  |   |      |   |  |   |         | 
|                                
|                                
|                                
|                                
|Net revenue                      |  |             |        |             |  | $         | 38,873 |          |  |        |       |              |  |   |     |   |  | $ | 38,873  | 
|                                
|                                
|                                
|                                
|Operating income (loss)          |  | $           | 59,084  |             |  |           | 15,536 |          |  | $      | (7,749 | )            |  |   |     |   |  |   | 66,871  | 
|                                
|                                
|                                
|                                
|Depreciation and amortization    |  |             |        |             |  |           | 5,246  |          |  |        | 394    |              |  |   |     |   |  |   | 5,640   | 
|                                
|                                
|                                
|                                
|EBITDA(2)                        |  |             | 59,084  |             |  |           | 20,782 |          |  |        | (7,355 | )            |  |   |     |   |  |   | 72,511  | 



|(1) |  | Represents expenses incurred in connection with the 2001 restructuring
and special charge. These expenses were not originally anticipated and
are therefore treated as a current period expense (see also Note 5).                                                                                                                                                                                                                                             
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | EBITDA represents earnings before interest, taxes and depreciation and
amortization. EBITDA is not a measurement of operating performance
computed in accordance with generally accepted accounting principles and
should not be considered as a substitute for operating income or net
income prepared in conformity with generally accepted accounting
principles. In addition, EBITDA may not be comparable to similarly titled
measures of other companies.

We also evaluate DonTech and DAS based on advertising sales because, while
these sales do not appear on our financial statements or the financial
statements of DonTech, they are a critical measure of performance reviewed by
management and play an important role in managements decision in allocating
financial resources. For a discussion of advertising sales, see Managements
Discussion and Analysis  Results of Operations.



|8. |  | Litigation
|-- |  | ----------

Rockland Yellow Pages.In 1999, Sandy Goldberg, Dellwood Publishing, Inc. and
Rockland Yellow Pages (as plaintiffs) initiated a lawsuit against the Company
and Bell Atlantic Corporation (as defendants) in the United States District
Court for the Southern District of New York. The Rockland Yellow Pages is a
proprietary directory that competes against a Bell Atlantic directory in the
same region, for which we served as Bell Atlantics advertising sales agent
through June 30, 2000. The complaint alleged that the defendants disseminated
false information concerning the Rockland Yellow Pages, which resulted in
damages to the Rockland Yellow Pages. In May 2001, the District Court
dismissed substantially all of plaintiffs claims, and in August 2001, the
remaining claims were either withdrawn by the plaintiffs or dismissed by the
District Court. The plaintiffs then filed a complaint against the same
defendants in New York State Supreme Court, in Rockland County, alleging
virtually the same state law tort claim previously dismissed by the District
Court and seeking unspecified damages. In October 2001, defendants filed a
motion to dismiss this complaint. On May 5, 2002, the Court granted
defendants motion to dismiss the complaint. Plaintiffs have filed an appeal
of this dismissal. Nonetheless, we presently do not believe that the final
outcome of this matter will have a material adverse effect on our results of
operations or financial condition.

Information Resources.In 1996, Information Resources, Inc. (IRI) filed a
complaint in the United States District Court for the Southern District of New
York, naming The Dun & Bradstreet Corporation (D&B), ACNielsen Company and
IMS International Inc., at the time of the filing, all wholly owned
subsidiaries of D&B, as defendants

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(the IRI Action). IRI alleges, among other things, various violations of the
antitrust laws, including alleged violations of Sections 1 and 2 of the Sherman
Act. The complaint also alleges a claim of tortuous interference with a
contract and a claim of tortuous interference with a prospective business
relationship. These claims relate to the acquisition by defendants of Survey
Research Group Limited (SRG). IRI alleges SRG violated an alleged agreement
with IRI when it agreed to be acquired by the defendants and that the
defendants induced SRG to breach that agreement. IRI is seeking damages in
excess of $350,000, which amount IRI seeks to treble under antitrust laws. IRI
is also seeking punitive damages of an unspecified amount. Under the
definitive agreement entered into in connection with our separation from D&B in
1998 (the Distribution Agreement), D&B assumed the defense and agreed to
indemnify us against any payments that we may be required to make, including
related legal fees. As required by the Distribution Agreement, Moodys
Corporation, which subsequently separated from D&B, agreed to be jointly and
severally liable with D&B for the indemnity obligation to us. At this stage in
the proceedings, we are unable to predict the outcome of this matter. While no
assurances can be provided, we currently believe that D&B and Moodys have
sufficient financial resources and borrowing capacity to reimburse us for any
payments we make and related costs we incur.

Tax Matters.Certain tax planning strategies entered into by D&B are
currently subject to review by tax authorities. As a result of the form of our
separation from D&B, we are the corporate successor of, and technically the
taxpayer referred to below as D&B. However, under the terms of the
Distribution Agreement and the Tax Allocation Agreement with D&B, D&B agreed to
assume the defense and to indemnify us for any tax liability that may be
assessed and any related costs and expenses we incur. Also, as required by the
Distribution Agreement, Moodys Corporation is jointly and severally liable
with D&B for the indemnity obligation to us. Under the terms of a series of
agreements between D&B, IMS Health Incorporated (IMS) and Nielsen Media
Research, Inc. (NMR) (both former subsidiaries of D&B), D&B is required to
pay the first $137,000 of any tax liability and accrued interest assessed by
the tax authorities with respect to certain tax matters (including those
discussed in detail below), as well as other tax liabilities. Any amount in
excess of $137,000 will be paid 50% by IMS and NMR jointly and severally and
50% by D&B.

In 2000, D&B filed an amended tax return with respect to the utilization of
capital losses in 1989 and 1990 in response to a formal IRS assessment. The
amended tax return reflected an additional $561,600 of tax and interest due.
In 2000, D&B paid the IRS $349,300 while IMS (on behalf of itself and NMR) paid
approximately $212,300. We understand that this payment was made under dispute
in order to stop additional interest from accruing and that D&B is contesting
the IRSs formal assessment and would also contest the assessment of amounts,
if any, in excess of the amounts paid, and that D&B has filed a petition for a
refund in the United States District Court.

In connection with that IRS assessment and amended tax return, IMS has filed an
arbitration proceeding against NMR claiming that NMR subsequently underpaid to
IMS its proper allocation of the above-referenced tax liability under the
agreements between NMR and IMS, to which neither D&B nor we are party. IMS has
included us as a respondent in the arbitration proceeding so that if NMR
prevails in its interpretation of the allocation computation, then IMS could
apply that same interpretation of the allocation computation against us under
its agreement with us (as successor to D&B). The arbitration panel has ruled
that we are a proper party to the arbitration. As required by the Distribution
Agreement and Tax Allocation Agreement, D&B and Moodys are defending us in
this arbitration proceeding at their cost and expense. If NMR prevails in the
arbitration against IMS and in turn IMS prevails against us, we believe that
our additional liability under this alternative interpretation of the
allocation computation would be approximately $15,000 (a $60,000 gross claim
offset by approximately $45,000 of tax benefit). While we believe that the
original interpretation of the allocation computation is correct and the claims
of IMS are without merit, if NMR prevails against IMS and in turn IMS prevails
against us in this arbitration proceeding, D&B and Moodys would be jointly and
severally obligated to indemnify us against any such liability.

We believe that the fact that D&B and IMS have already paid the IRS a
substantial amount of additional taxes with respect to the contested tax
planning strategies significantly mitigates our risk. While no assurances can
be given, we currently believe that D&B and Moodys have sufficient financial
resources and borrowing capacity to reimburse us for any payments we make and
related costs we incur.

During the second quarter of 2002, D&B received a Notice of Proposed Adjustment
from the IRS with respect to a transaction entered into in 1993. In this
Notice, the IRS proposed to disallow certain royalty expense deductions claimed
by D&B on its 1994, 1995 and 1996 tax returns. The IRS previously concluded an
audit of this transaction for

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taxable years 1993 and 1994 and did not disallow any similarly claimed
deductions. We understand that D&B disagrees with the position taken by the
IRS in its Notice and has filed a responsive brief to this effect with the IRS.
If the IRS were to issue a formal assessment consistent with the Notice, then
a payment of the disputed amounts would be required, if D&B opted to challenge
the assessment in U.S. District Court rather than in U.S. Tax Court. In the
event of such challenge by D&B, the required payment by D&B to the IRS would be
up to $42,000 ($48,000 offset by $6,000 tax benefit). Again, as
required by the Distribution Agreement and Tax Allocation Agreement, D&B and
Moodys are required to joint and severally indemnify us against any such
liability.

No material amounts have been accrued in the consolidated financial statements
for any of these matters.

Other matters.We are also involved in other legal proceedings, claims and
litigation arising in the ordinary conduct of our business. Although there can
be no assurances, we currently believe that the outcome of such legal
proceedings will not have a material adverse effect on our results of
operations or financial condition.



|9. |  | New Accounting Pronouncements
|-- |  | -----------------------------

In April 2002, the Financial Accounting Standards Board (FASB) issued FAS
145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections. This statement, among other
things, changes the way gains and losses from the extinguishment of debt are
reported. Previously, all gains and losses from the extinguishment of debt
were required to be reported as an extraordinary item, net of related tax
effect. Under FAS 145, gains and losses from the extinguishment of debt should
be reported as part of on-going operations, unless the extinguishment of debt
is both an unusual and infrequent event for the entity. Previously reported
extraordinary gains and losses from the extinguishment of debt that are not
unusual or infrequent should be reclassified. This Statement is effective for
2003. Upon adoption of this Statement, we will reclassify amounts previously
reported as extraordinary losses to interest expense and tax expense. The
adoption of this Statement will not impact our previously reported net income.
Had we decided to adopt this Statement during the second quarter of 2002,
reported interest expense for the six months ended June 30, 2002 and 2001 would
have been $0.3 million and $0.5 million higher, respectively. Additionally,
reported provision for income taxes for the six months ended June 30, 2002 and
2001 would have been $0.1 million and $0.2 million lower, respectively.

In June 2002, the FASB issued FAS 146, Accounting for Costs Associated with
Exit or Disposal Activities. FAS 146 addresses the accounting and reporting
for costs associated with exit or disposal activities and nullifies Emerging
Issues Task Force Issue 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring). This Statement is effective for 2003 and
is to be applied prospectively.

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Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations

Forward-Looking Information

Certain statements contained in this Form 10-Q regarding R.H. Donnelleys
future operating results, performance, business plans or prospects and any
other statements not constituting historical fact are forward-looking
statements subject to the safe harbor created by the Private Securities
Litigation Reform Act of 1995. Where possible, words such as believe,
expect, anticipate, should, will, would, planned, estimated,
potential, goal, outlook, could, and similar expressions, are used to
identify such forward-looking statements. All forward-looking statements
reflect only our current beliefs and assumptions with respect to our future
results, business plans, and prospects, and are based solely on information
currently available to us. Accordingly, these statements are subject to
significant risks and uncertainties and our actual results, business plans and
prospects could differ significantly from those expressed in, or implied by,
these statements. We caution readers not to place undue reliance on, and we
undertake no obligation to update any forward-looking statements. Such risks
and uncertainties include, without limitation, the following:

(1)  Dependence on a Limited Number of Relationships
Our business consists primarily of two relationships; a perpetual partnership
with SBC Communications Inc. (SBC) called DonTech; and two sales agency
arrangements with Sprint Corporation (Sprint), which expire in 2004 and 2010.
Due to the limited number of relationships, our business portfolio is not
highly diversified and a material decline in the results of one relationship,
especially our relationship with SBC, would likely have a material adverse
effect on our overall operating results. No assurance can be given that we
will be able to renew our existing Sprint sales agency or various pre-press
publishing agreements as they expire or that we will be able to secure
additional business to replace these contracts as they expire. Any such
failure to renew or replace these contracts would likely have a material
adverse effect on our financial condition and results of operations.

(2)  Dependence on our Business Partners
DonTech is the exclusive sales agent for SBCs yellow pages directories in
certain markets and we are the exclusive sales agent for Sprints yellow pages
directories in certain markets. SBC and Sprint are the publishers of these
directories. As the exclusive sales agent, DonTech and we are responsible for
the management of our respective sales forces, including compensation,
recruiting, training and other sales related matters. As the publisher, SBC
and Sprint have responsibility for and control over all other matters,
including without limitation, product development, pricing, scheduling,
marketing, distribution, billing, collections, credit and customer service.
While we believe that DonTechs and our economic interests are generally
aligned with those of SBC and Sprint with respect to their yellow pages
directory operations, SBC or Sprint could implement policies or decisions (in
which DonTech or we would likely have little or no participation or influence),
and/or perform their obligations in a manner that could have a material adverse
effect on our results of operations or financial condition and, potentially, on
our relationship with our business partners. DonTech and we are afforded
certain protections under the respective agreements, which we believe could
mitigate to a significant degree the adverse effects of such policy changes or
decisions on us. However, we cannot give any assurances that such policy
changes or decisions would not have a material adverse effect on our results of
operations, financial condition or our relationship with our business partners.
Lastly, we maintain large receivable balances from SBC and Sprint, and any
liquidity difficulties that they may experience could materially impact our
results of operations, financial condition and liquidity.

(3)  Uncertainty Regarding Changes in the Industry
Our ability to diversify our business portfolio by providing sales agency,
pre-press publishing or other services to SBC or Sprint in other markets or to
other publishers in the industry may be impacted by uncertainties caused by
consolidation within the telecommunications and independent yellow pages
publishing industries or other changes. Also, most yellow pages directory
publishers provide all sales and publishing functions internally, which could
impact our ability to renew or obtain additional outsourcing business from our
current publishers or offer our services to other yellow pages directory
publishers. Our inability to diversify our business portfolio or expand the
services we provide could negatively impact our ability to grow revenues and
income and/or have a material adverse effect on our financial condition and
results of operations. In addition, the effects of the Telecommunications Act
of 1996 are still developing and the ultimate impact of those changes is still
uncertain. The introduction of new products or technologies (including
electronic delivery of directory information) by other companies and/or pricing
pressures from competitors or customers could also adversely affect our results
of operations and financial condition.

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Sprint has publicly announced that it is considering divesting its directory
publishing operations. We do not believe that any sale or change in control of
the Sprint directory operations would have a material adverse effect on our
results of operations or financial condition because we believe all of our
contractual rights related to serving as sales agent in the Central Florida and
CenDon markets would survive any such sale or change in control. In addition,
our CenDon agreements specifically obligate Sprint (and any successor) to
indemnify us against any material damages we suffer as a result of any changes
in policies, practices and procedures from those in existence at the time of
the restructuring of the CenDon relationship (June 30, 2000).

(4)  General Economic Factors
Our business results could be adversely affected by the reversal or slow down
of the modest economic recovery presently being experienced in the United
States, especially with respect to the markets in which we operate. In
addition, any residual economic effects of, and uncertainties regarding (i) the
terrorist attacks that occurred on September 11, 2001, (ii) the general
possibility or express threat of similar terrorist or other related disruptive
events, or (iii) the future occurrence of similar terrorist or other related
disruptive events, especially with respect to the major markets in which we
operate that depend heavily upon travel and tourism, could also adversely
affect our business.

(5)  Use of Cash Flow
Our free cash flow may be used for some or all of the following: repay debt,
repurchase outstanding common stock and/or pursue growth initiatives within our
line of business and core competencies, whether through acquisitions, joint
ventures, outsourcing opportunities or otherwise. Any share repurchases would
be subject to market conditions and compliance with legal restrictions, as well
as restrictions under our debt covenants. Growth initiatives, if pursued,
would be subject to implementation, integration and other related risks. Any
significant growth initiative would likely require the issuance of additional
indebtedness and could involve the public or private sale of our equity
securities and no assurance can be given that any proposed transaction would be
accretive to earnings. We did not repurchase any common stock in the first
half of 2002. We currently intend to apply excess cash to repay debt, while we
evaluate certain growth opportunities within our line of business.

The Company

R.H. Donnelley Corporation is a leading independent marketer of yellow pages
advertising services tailored for small and medium-sized businesses. Our
business is organized into two reportable operating segments as of January 1,
2002, the DonTech Partnership (DonTech) and Directory Advertising Services
(DAS). Unless otherwise indicated, the terms Company, we, us and our
refer to R.H. Donnelley Corporation and its direct and indirect wholly owned
subsidiaries. All tabular amounts are presented in millions of dollars.

DonTech
DonTech is a 50/50 perpetual partnership in which the Company and an operating
unit of SBC are the partners. DonTech acts as the exclusive sales agent for
yellow pages directories published by SBC in Illinois and northwest Indiana.
DonTech sells advertising in SBC directories on behalf of SBC and receives a
commission from SBC. Our income associated with DonTech is comprised of two
components, our 50% interest in the net income of DonTech and revenue
participation income received directly from SBC, which is based on a percentage
of DonTech advertising sales. Income from DonTech accounts for a significant
portion of our operating income and a material decline in the advertising sales
of DonTech would likely have a material adverse effect on our results of
operations and financial condition. We also provide certain pre-press
publishing and billing services for SBC directories, as well as provide sales
related computer applications to DonTech. The fees received for these services
are included in our Directory Advertising Services (DAS) segment.

Directory Advertising Services
Within our DAS segment, we sell yellow pages advertising in Sprint directories
on behalf of affiliated entities of Sprint, perform pre-press publishing and
related services for yellow pages directories and include all information
technology costs. We are the exclusive sales agent in the greater Orlando,
Florida market (Central Florida) for a subsidiary of Sprint and the exclusive
sales agent in certain Nevada, Florida, Virginia and North Carolina markets for
CenDon LLC (CenDon), a joint venture with Centel Directory Company
(Centel), another subsidiary of Sprint. Other Sprint affiliates sell yellow
pages advertising in other markets in these states. We receive sales
commissions on all advertising we sell for Sprint and CenDon and a priority
distribution on our membership interest in CenDon (priority

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distribution), which is based on a percentage of CenDon advertising sales. A
material decline in the advertising sales of our Sprint operation could have a
material adverse effect on our results of operations and financial condition.
Our Central Florida sales agency relationship extends through 2004 and our
CenDon sales agency relationship extends through 2010.

In 2000, we extended our agreements with CenDon until 2010. They were
originally set to expire in 2004. The priority distribution was designed to
allow us to maintain the same level of profitability that we would have earned
under the predecessor CenDon Partnership through its scheduled expiration date
in 2004. Under the new agreements, total payments we receive from CenDon
(sales commission plus priority distribution) are expected to average
approximately 37% of CenDon advertising sales through 2004. Starting with
sales into 2005 directories, we will not receive a priority distribution.
However, as part of the restructured arrangement, we will receive a
supplemental sales commission for sales into 2005 through 2007 directories.
Total payments from CenDon (sales commission plus supplemental sales
commission) in 2005 are expected to be approximately 35% of CenDon advertising
sales and are expected to decline 4 percentage points per year through 2007.
For sales into 2008  2010 publications, we will receive our base 23%
commission on CenDon advertising sales.

We also provide pre-press publishing services under separately negotiated
contracts for the yellow pages directories of Sprint (through 2003) and SBC
(through 2008) for which we and DonTech sell advertising, as well as for an
unaffiliated third party publisher (through 2002). At the end of 2002, the
pre-press publishing agreement with this unaffiliated publisher will expire.
As a result of the restructuring actions announced in 2001, the expiration of
this contract will not have a material adverse effect on our results of
operations or financial condition in the future. We intend to pursue
negotiations with Sprint to extend the current pre-press publishing agreement
set to expire in 2003, although no assurance can be given that we will be able
to extend this contract.

Our ability to provide sales agency, pre-press publishing or other services to
SBC or Sprint in other markets or to other publishers in the industry may be
impacted by uncertainties caused by consolidation within the telecommunications
and independent yellow pages publishing industries or other changes. Also,
most yellow pages directory publishers provide all sales and publishing
functions internally, which could impact our ability to renew or obtain
additional outsourcing business from our current publishers or offer our
services to other yellow pages directory publishers. Our inability to expand
the services we provide could negatively impact our ability to grow revenues
and income and/or have a material adverse effect on our financial condition and
results of operations. In addition, the effects of the Telecommunications Act
of 1996 are still developing and the ultimate impact of those changes is still
uncertain. See also   Forward Looking Information  Dependence on a Limited
Number of Relationships and  Uncertainty Regarding Changes in the Industry
above.

Critical Accounting Policies

Certain amounts in our financial statements require that management makes
assumptions and estimates based on the best available information at that time.
Actual results could vary from these estimates and assumptions. Those
accounting policies that involve assumptions or estimates on our part that
could have a material effect on our results of operations or financial
condition if the actual results differ from our assumptions or estimates are as
follows:

Revenue Recognition.We earn revenue in the form of commissions from the sale
of advertising on behalf of Sprint and fees from our pre-press publishing
services. As a sales agent for Sprint, we recognize sales commission revenue
at the time an advertising contract is executed with a customer. Sales
commission revenue is recorded net of potential sales allowances, which are
estimated, based on historical experience. If an advertiser is not satisfied
with its yellow page advertisement (i.e. misspelled business name, incorrect
business address or number, etc.), the publisher may, at its discretion, adjust
the contract value. Since we earn commissions based on the aggregate value of
advertising contracts, our commissions would also be adjusted under those
circumstances. Concurrent with the recognition of sales commission revenue, we
also recognize a sales allowance of approximately 1% of sales commission
revenue, based on historical experience. The amount of sales allowance
recognized is subsequently adjusted based on actual results. Historically, the
actual amount of sales allowances has been consistent with our estimates and
significant adjustments have not been made. Revenue from pre-press publishing
operations is recognized as services are performed. We recognize no allowances
for pre-press publishing services.

Trade Receivables.Trade receivables represent sales commissions earned from
the sale of advertising on behalf of Sprint and fees earned for pre-press
publishing services. We establish an allowance for doubtful accounts based
upon historical

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experience and subject to contractual limitations. Our exposure to bad debt is
capped under the sales agency agreement with CenDon. We record our bad debt
allowance for CenDon sales based on the cap rate since the actual rate of bad
debts has exceeded the capped rate for the last three years. An increase in
the actual bad debt rate will not have any direct impact on our financial
condition or results of operations. Under the Central Florida sales agency
agreement, our exposure to bad debts is not capped and we estimate our bad debt
allowance based on historical experience. This amount is subject to adjustment
based on actual results. On an annualized basis, a 1% increase in actual bad
debts with respect to Central Florida over the amount originally provided for
would increase our consolidated expenses approximately $0.1 million.
Historically, actual bad debts on these receivables have been consistent with
our estimates and significant adjustments have not been made.

Receivables for sales commissions are billed to the publisher upon directory
publication and collected in accordance with contractual provisions, typically
in the same month of publication, but no later than nine months after
publication. Receivables for pre-press publishing services are billed and
collected in accordance with the terms of the applicable agreement, generally a
monthly pro rata amount based on the annual contract value. If actual volumes
exceed contracted volumes, an additional amount is billed to the publisher at
year-end.

Investment Impairment.We have an 18% interest in ChinaBig.com (ChinaBig),
which publishes yellow pages directories and offers Internet directory services
in the Peoples Republic of China. We account for this investment under the
cost method and the carrying value of this investment is reflected as other
non-current assets on the consolidated balance sheets. We evaluate the
carrying value of this investment for impairment whenever events or changes in
circumstances indicate that the carrying value may be impaired. Such events or
changes in circumstance may include (i) a change in the extent or manner in
which management intends to use the asset; (ii) a decrease in the market value
of the asset; (iii) an independent valuation of the asset or similar type asset
or (iv) a history of operating cash flow losses. If the investment is
determined to be impaired, and such impairment is determined to be permanent,
the carrying value would be written down to its fair value. As a quoted market
price does not exist for this investment, fair value would be determined based
other factors, including, but not limited to, an independent valuation,
discounted cash flow analysis or a transaction in the marketplace involving a
similar type investment. To evaluate whether the carrying value of the ChinaBig
investment is recoverable, we review periodic financial statements, including
cash flows, short-term and long-term operating and cash flow projections and
have a seat on the Board of Directors of ChinaBig. During the six-month period
ended June 30, 2002, no events or changes in circumstances occurred that would
indicate possible impairment of the carrying value of the ChinaBig investment.

Concentration of Credit Risk.We maintain significant receivable balances
with SBC and Sprint for revenue participation, priority distribution and sales
commissions. We do not currently foresee a material credit risk associated
with these receivables based on SBC and Sprints past payment history and
strong cash flows from their respective directory operations. However, there
can be no assurance that full payment will continue to be received on a timely
basis.

Income Taxes.We recognize deferred tax assets for items that will give rise
to future tax deductions. A valuation allowance is established where expected
future taxable income does not support the full realization of deferred tax
assets.

See Note 2 to the Consolidated Financial Statements for additional information
on our accounting policies.

New Accounting Pronouncements

In April 2002, the Financial Accounting Standards Board (FASB) issued FAS
145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections. This statement, among other
things, changes the way gains and losses from the extinguishment of debt are
reported. Previously, all gains and losses from the extinguishment of debt
were required to be reported as an extraordinary item, net of related tax
effect. Under FAS 145, gains and losses from the extinguishment of debt should
be reported as part of on-going operations, unless the extinguishment of debt
is both an unusual and infrequent event for the entity. Previously reported
extraordinary gains and losses from the extinguishment of debt that are not
unusual or infrequent should be reclassified. This Statement is effective for
2003. Upon adoption of this Statement, we will reclassify amounts previously
reported as extraordinary losses to interest expense and tax expense. The
adoption of this Statement will not impact our previously reported net income.
Had we decided to adopt this Statement during the second quarter of 2002,
reported interest expense for the six months ended June 30, 2002 and 2001 would
have been $0.3 million and $0.5 million higher,

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respectively. Additionally, reported provision for income taxes for the six
months ended June 30, 2002 and 2001 would have been $0.1 million and $0.2
million lower, respectively.

In June 2002, the FASB issued FAS 146, Accounting for Costs Associated with
Exit or Disposal Activities. FAS 146 addresses the accounting and reporting
for costs associated with exit or disposal activities and nullifies Emerging
Issues Task Force Issue 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring). This Statement is effective for 2003 and
is to be applied prospectively.

RESULTS OF OPERATIONS
Three and six months ended June 30, 2002 and 2001

Net Revenue

Revenue is derived entirely from our DAS segment. As a sales agent for Sprint,
we earn commission revenue based on the annual billing value of advertisements
sold for Sprint directories in the period (Sprint calendar sales). We record
our sales commission revenue net of an estimated amount for our share of
credits Sprint may give customers for errors. We also earn revenue from our
pre-press publishing services.

The amount of commission revenue we earn is directly correlated to Sprint
calendar sales recorded during the period. We manage our selling process on a
directory by directory basis. We organize each directory into a sales
campaign. A typical sales campaign begins approximately six to eight months
before a directory is published and ends approximately two months before the
directory is published. Therefore, changes in directory publication dates, the
beginning and ending dates of a sales campaign and the actual sales recorded at
any point during the campaign can vary from one period to the next. These
variations can cause sales commissions earned in the period (net revenue) to be
materially different from net revenue earned in a prior comparative period.

Net revenue detail for the quarter and six months ended June 30, 2002 and 2001
was as follows:

|                          |             |   |      |      |      |   |          |      |          |   |      |      |   |  |      |      |   
|------------------------- | ----------- | - | ---- | ---- | ---- | - | -------- | ---- | -------- | - | ---- | ---- | - |  | ---- | ---- | --
|                          |             |   | 2002 |      | 2001 |   | $ Change |      | % Change
|                          |             |   |      |      |      |   |          |      |         
|Quarter ended June 30,    |             |   |      |      |      |   |          |      |          |   |      |      |   |  |      |     
|                         
|                         
|                         
|                         
|Sales commissions         |             | $ | 12.3 |      |      | $ | 12.4     |      |          | $ | (0.1 | )    |   |  | (0.8 | )%  
|                         
|                         
|                         
|                         
|Less: sales allowances    |             |   | (0.1 | )    |      |   | (0.3     | )    |          |   | 0.2  |      |   |  | 66.7 | %   
|                          |             |   |      |      |      |   |          |      |          |   |      |      |   |  |      |     
|Net sales commissions     |             |   | 12.2 |      |      |   | 12.1     |      |          |   | 0.1  |      |   |  | 0.8  | %   
|                         
|                         
|                         
|                         
|Pre-press publishing      |             |   | 7.3  |      |      |   | 7.9      |      |          |   | (0.6 | )    |   |  | (7.6 | )%  
|                          |             |   |      |      |      |   |          |      |          |   |      |      |   |  |      |     
|                          | Net revenue |   | $    | 19.5 |      |   | $        | 20.0 |          |   | $    | (0.5 | ) |  |      | (2.5 | )%
|                          |             |   |      |      |      |   |          |      |          |   |      |      |   |  |      |     
|Six months ended June 30, |             |   |      |      |      |   |          |      |          |   |      |      |   |  |      |     
|                         
|                         
|                         
|                         
|Sales commissions         |             | $ | 22.1 |      |      | $ | 22.7     |      |          | $ | (0.6 | )    |   |  | (2.6 | )%  
|                         
|                         
|                         
|                         
|Less: sales allowances    |             |   | (0.2 | )    |      |   | (0.6     | )    |          |   | 0.4  |      |   |  | 66.7 | %   
|                          |             |   |      |      |      |   |          |      |          |   |      |      |   |  |      |     
|Net sales commissions     |             |   | 21.9 |      |      |   | 22.1     |      |          |   | (0.2 | )    |   |  | (0.9 | )%  
|                         
|                         
|                         
|                         
|Pre-press publishing      |             |   | 15.9 |      |      |   | 16.8     |      |          |   | (0.9 | )    |   |  | (5.4 | )%  
|                          |             |   |      |      |      |   |          |      |          |   |      |      |   |  |      |     
|                          | Net revenue |   | $    | 37.8 |      |   | $        | 38.9 |          |   | $    | (1.1 | ) |  |      | (2.8 | )%
|                          |             |   |      |      |      |   |          |      |          |   |      |      |   |  |      |     

Net revenue was $19.5 million and $37.8 million for the quarter and six months
ended June 30, 2002, respectively, compared to $20.0 million and $38.9 million
for the quarter and six months ended June 30, 2001. Commission revenue was
slightly lower for the quarter and year-to-date 2002 periods compared to the
corresponding 2001 periods as Sprint calendar sales (on which we earn
commission revenue) during these periods were also lower. The decrease in
Sprint calendar sales was due to poor economic conditions during the first half
of the year and the timing of sales campaigns relative to 2001. During 2002,
certain earlier sales campaigns were extended in order to provide an
opportunity for increased sales causing the start of other campaigns to be
delayed. Additionally, the economic conditions during the first half of the
year resulted in advertisers reducing the level of advertising spending,
deciding not to advertise or not being allowed to continue to advertise under
Sprints credit policy due to payment delinquency. Sales allowances for the
quarter and six-month period were lower than the prior year as sales allowances
provided for

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certain sales in 2001 (and subsequently reversed in September 2001) are no
longer required to be provided for.

Pre-press publishing revenue was lower for the quarter and six-month period due
to anticipated declines in volume. As a result of the pending expiration of
the third party pre-press publishing contract in December 2002, the level of
services provided is winding down, as preparatory services are not being
provided for 2003 publications.

The table below sets forth the sales that we sold on behalf of Sprint and the
sales that DonTech sold on behalf of SBC during the periods noted. DonTech
manages its selling process in a similar manner as we manage our selling
process. Accordingly, DonTech calendar sales (sales recorded by DonTech on
behalf of SBC during the period) can vary from one period to the next due to
changes in directory publication dates, the beginning and ending dates of a
sales campaign and the actual sales recorded at any point during the campaign.
Our commission revenue and priority distribution income (reported as
partnership and joint venture income) from Sprint are directly correlated to
the amount of Sprint calendar sales recorded in the period and our revenue
participation income from SBC (reported as partnership and joint venture
income) is directly correlated to the amount of DonTech calendar sales recorded
in the period. Therefore, a material change in DonTech calendar sales or
Sprint calendar sales would have a material effect on our results of operations
and financial condition.

|                          |       |   |       |       |      |   |          |       |          |   |      |      |   |  |      |      |   
|------------------------- | ----- | - | ----- | ----- | ---- | - | -------- | ----- | -------- | - | ---- | ---- | - |  | ---- | ---- | --
|                          |       |   | 2002  |       | 2001 |   | $ Change |       | % Change
|                          |       |   |       |       |      |   |          |       |         
|Quarter ended June 30,    |       |   |       |       |      |   |          |       |          |   |      |      |   |  |      |     
|                         
|                         
|                         
|                         
|DonTech                   |       | $ | 125.2 |       |      | $ | 125.2    |       |          |   |     |      |   |  |     |     
|                         
|                         
|                         
|                         
|DAS                       |       |   | 53.0  |       |      |   | 53.3     |       |          | $ | (0.3 | )    |   |  | (0.6 | )%  
|                          |       |   |       |       |      |   |          |       |          |   |      |      |   |  |      |     
|                          | Total |   | $     | 178.2 |      |   | $        | 178.5 |          |   | $    | (0.3 | ) |  |      | (0.2 | )%
|                          |       |   |       |       |      |   |          |       |          |   |      |      |   |  |      |     
|Six months ended June 30, |       |   |       |       |      |   |          |       |          |   |      |      |   |  |      |     
|                         
|                         
|                         
|                         
|DonTech                   |       | $ | 207.1 |       |      | $ | 208.7    |       |          | $ | (1.6 | )    |   |  | (0.8 | )%  
|                         
|                         
|                         
|                         
|DAS                       |       |   | 95.6  |       |      |   | 98.2     |       |          |   | (2.6 | )    |   |  | (2.6 | )   
|                          |       |   |       |       |      |   |          |       |          |   |      |      |   |  |      |     
|                          | Total |   | $     | 302.7 |      |   | $        | 306.9 |          |   | $    | (4.2 | ) |  |      | (1.4 | )%
|                          |       |   |       |       |      |   |          |       |          |   |      |      |   |  |      |     

See above for an explanation for the changes in Sprint calendar sales during
the applicable period and  Partnership and Joint Venture Income below for an
explanation of the changes in DonTech calendar sales during the applicable
period. We followed an aggressive sales campaign schedule during last years
third quarter which we will not follow during this years third quarter. As a
result, we expect DonTech and Sprint calendar sales for this years third
quarter to be lower than last years third quarter and accordingly, also expect
revenue and partnership and joint venture income to be lower than last years
third quarter. However, we expect that fourth quarter 2002 results will show
corresponding increases over the fourth quarter 2001 results.

Management also reviews and analyzes the value of advertising sales sold on
behalf of SBC and Sprint in directories that published during the period
(publication sales). A comparison of publication sales from one period to
another gives an indication of underlying sales growth in the directories for
which DonTech and we sell advertising. We review publication sales for the
period against publication sales for the same directories published in the
prior year period (a same store sales type metric). Management considers
this metric a lagging indicator of our sales performance. This metric also
removes all the timing issues associated with a sales campaign. However,
publication sales do not have a direct correlation to our reported revenue or
profitability in the indicated period as most, if not all, of these sales were
consummated and reported in prior periods.

If the directories that published in the current period are not consistent with
the directories published in the comparable prior year period, we adjust the
prior year period to include those directories that published during the
current year period. A DonTech directory originally scheduled to publish in
February 2002 was published in December 2001. To conform to the 2002
publication schedule, publication sales for the six months ended June 30, 2001
were adjusted to remove the value of the February 2001 directory ($28.3
million). Publication sales for the three and six months ended June 30, 2002
and 2001 were as follows:

|                          |       |   |       |       |      |   |          |       |          |   |       |       |   |  |      |      |   
|------------------------- | ----- | - | ----- | ----- | ---- | - | -------- | ----- | -------- | - | ----- | ----- | - |  | ---- | ---- | --
|                          |       |   | 2002  |       | 2001 |   | $ Change |       | % Change
|                          |       |   |       |       |      |   |          |       |         
|Quarter ended June 30,    |       |   |       |       |      |   |          |       |          |   |       |       |   |  |      |     
|                         
|                         
|                         
|                         
|DonTech                   |       | $ | 90.6  |       |      | $ | 89.5     |       |          | $ | 1.1   |       |   |  | 1.2  | %   
|                         
|                         
|                         
|                         
|DAS                       |       |   | 27.8  |       |      |   | 28.9     |       |          |   | (1.1  | )     |   |  | (3.8 | )   
|                          |       |   |       |       |      |   |          |       |          |   |       |       |   |  |      |     
|                          | Total |   | $     | 118.4 |      |   | $        | 118.4 |          |   |       |      |   |  |      |     |   
|                          |       |   |       |       |      |   |          |       |          |   |       |       |   |  |      |     
|Six months ended June 30, |       |   |       |       |      |   |          |       |          |   |       |       |   |  |      |     
|                         
|                         
|                         
|                         
|DonTech                   |       | $ | 184.7 |       |      | $ | 194.8    |       |          | $ | (10.1 | )     |   |  | (5.2 | )%  
|                         
|                         
|                         
|                         
|DAS                       |       |   | 75.1  |       |      |   | 80.5     |       |          |   | (5.4  | )     |   |  | (6.7 | )   
|                          |       |   |       |       |      |   |          |       |          |   |       |       |   |  |      |     
|                          | Total |   | $     | 259.8 |      |   | $        | 275.3 |          |   | $     | (15.5 | ) |  |      | (5.6 | )%
|                          |       |   |       |       |      |   |          |       |          |   |       |       |   |  |      |     

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The decline of $15.5 million, or 5.6% in the six months ended June 30, 2002
compared to the six months ended June 30, 2001 was primarily due to declines in
SBCs Chicago Consumer directory ($12.4 million) and Sprints January Las Vegas
directory ($3.9 million). The advertisements in these directories were sold
during the latter half of 2001 and were impacted by deteriorating economic
conditions and increased uncertainty among advertisers.

Partnership and Joint Venture Income

We earn a significant amount of our operating income from our DonTech operation
and our CenDon relationship and recognize the income from these sources as
partnership and joint venture income. Partnership and joint venture income
(partnership income) from DonTech includes our share of the net income of
DonTech (accounted for under the equity method) and revenue participation
income from SBC. As a sales agent for SBC, DonTech earns commission revenue
based on the annual billing value of advertisements sold for SBC directories in
the period (DonTech calendar sales). DonTechs net income (of which we
recognize 50%) is dependent on DonTech calendar sales. Additionally, our
revenue participation income is directly correlated to the amount of DonTech
calendar sales in the period. Partnership income from our CenDon relationship
consists of the priority distribution on our membership interest in CenDon LLC.
Partnership income for the quarter and six months ended June 30, 2002 and 2001
was as follows:

|                             |                       |  |      |      |      |  |          |      |          |  |      |      |   |  |      |      |   
|---------------------------- | --------------------- |  | ---- | ---- | ---- |  | -------- | ---- | -------- |  | ---- | ---- | - |  | ---- | ---- | --
|                             |                       |  | 2002 |      | 2001 |  | $ Change |      | % Change
|                             |                       |  |      |      |      |  |          |      |         
|Quarter ended June 30,       |                       |  |      |      |      |  |          |      |          |  |      |      |   |  |      |     
|                            
|                            
|                            
|                            
|DonTech                      |                       |  |      |      |      |  |          |      |          |  |      |      |   |  |      |     
|                            
|                            
|                            
|                            
|                             | Revenue participation |  | $    | 29.9 |      |  | $        | 30.0 |          |  | $    | (0.1 | ) |  |      | (0.3 | )%
|                            
|                            
|                            
|                            
|                             | Equity income share   |  |      | 6.7  |      |  |          | 7.1  |          |  |      | (0.4 | ) |  |      | (5.6 | ) 
|                             |                       |  |      |      |      |  |          |      |          |  |      |      |   |  |      |     
|Total DonTech                |                       |  | 36.6 |      |      |  | 37.1     |      |          |  | (0.5 | )    |   |  | (1.3 | )   
|                            
|                            
|                            
|                            
|CenDon priority distribution |                       |  | 4.3  |      |      |  | 4.1      |      |          |  | 0.2  |      |   |  | 4.9  |     
|                             |                       |  |      |      |      |  |          |      |          |  |      |      |   |  |      |     
|                             | Total                 |  | $    | 40.9 |      |  | $        | 41.2 |          |  | $    | (0.3 | ) |  |      | (0.7 | )%
|                             |                       |  |      |      |      |  |          |      |          |  |      |      |   |  |      |     
|Six months ended June 30,    |                       |  |      |      |      |  |          |      |          |  |      |      |   |  |      |     
|                            
|                            
|                            
|                            
|DonTech                      |                       |  |      |      |      |  |          |      |          |  |      |      |   |  |      |     
|                            
|                            
|                            
|                            
|                             | Revenue participation |  | $    | 49.3 |      |  | $        | 50.2 |          |  | $    | (0.9 | ) |  |      | (1.8 | )%
|                            
|                            
|                            
|                            
|                             | Equity income share   |  |      | 9.2  |      |  |          | 8.9  |          |  |      | 0.3  |   |  |      | 3.4  |   
|                             |                       |  |      |      |      |  |          |      |          |  |      |      |   |  |      |     
|Total DonTech                |                       |  | 58.5 |      |      |  | 59.1     |      |          |  | (0.6 | )    |   |  | (1.0 | )   
|                            
|                            
|                            
|                            
|CenDon priority distribution |                       |  | 9.5  |      |      |  | 9.1      |      |          |  | 0.4  |      |   |  | 4.4  |     
|                             |                       |  |      |      |      |  |          |      |          |  |      |      |   |  |      |     
|                             | Total                 |  | $    | 68.0 |      |  | $        | 68.2 |          |  | $    | (0.2 | ) |  |      | (0.3 | )%
|                             |                       |  |      |      |      |  |          |      |          |  |      |      |   |  |      |     

Partnership income was $40.9 million and $68.0 million for the quarter and six
months ended June 30, 2002, respectively, compared to $41.2 million and $68.2
million for the quarter and six months ended June 30, 2001. Our share of
DonTechs net profit for the quarter was slightly lower than last year
primarily due to the timing of partnership expenses. For the six-month period,
partnership income from DonTech was lower due to a decline in revenue
participation income caused by lower DonTech calendar sales (see Net Revenue
above for the amount of DonTech calendar sales) as advertisers remain cautious
in the current economic environment and are buying smaller advertising programs
than they have typically purchased in prior years. This decline in revenue
participation income was partially offset by higher equity income as a result
of partnership expense savings in 2002.

CenDon priority distribution income increased in the quarter and six-month
period as a result of a contractual increase in the priority distribution rate
for 2002 more than offsetting the negative effect of lower calendar sales (see
Net Revenue above for a discussion of Sprint calendar sales).

Expenses

18



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##### Table of Contents



Expenses were as follows:

|                                 |       |   |      |      |      |   |          |      |          |   |      |      |   |  |       |      |   
|-------------------------------- | ----- | - | ---- | ---- | ---- | - | -------- | ---- | -------- | - | ---- | ---- | - |  | ----- | ---- | --
|                                 |       |   | 2002 |      | 2001 |   | $ Change |      | % Change
|                                 |       |   |      |      |      |   |          |      |         
|Quarter ended June 30,           |       |   |      |      |      |   |          |      |          |   |      |      |   |  |       |     
|                                
|                                
|                                
|                                
|Operating expenses               |       | $ | 13.6 |      |      | $ | 14.3     |      |          | $ | (0.7 | )    |   |  | (4.9  | )%  
|                                
|                                
|                                
|                                
|G&A expense                      |       |   | 4.5  |      |      |   | 5.0      |      |          |   | (0.5 | )    |   |  | (10.0 | )   
|                                
|                                
|                                
|                                
|D&A expense                      |       |   | 1.6  |      |      |   | 2.7      |      |          |   | (1.1 | )    |   |  | (40.7 | )   
|                                
|                                
|                                
|                                
|Restructuring and special
charge |       |   | 0.2  |      |      |   |         |      |          |   | 0.2  |      |   |  | n/m   |     
|                                 |       |   |      |      |      |   |          |      |          |   |      |      |   |  |       |     
|                                 | Total |   | $    | 19.9 |      |   | $        | 22.0 |          |   | $    | (2.1 | ) |  |       | (9.5 | )%
|                                 |       |   |      |      |      |   |          |      |          |   |      |      |   |  |       |     
|Six months ended June 30,        |       |   |      |      |      |   |          |      |          |   |      |      |   |  |       |     
|                                
|                                
|                                
|                                
|Operating expenses               |       | $ | 24.9 |      |      | $ | 25.4     |      |          | $ | (0.5 | )    |   |  | (2.0  | )%  
|                                
|                                
|                                
|                                
|G&A expense                      |       |   | 9.5  |      |      |   | 9.2      |      |          |   | 0.3  |      |   |  | 3.3   |     
|                                
|                                
|                                
|                                
|D&A expense                      |       |   | 3.2  |      |      |   | 5.6      |      |          |   | (2.4 | )    |   |  | (42.9 | )   
|                                
|                                
|                                
|                                
|Restructuring and special
charge |       |   | 0.2  |      |      |   |         |      |          |   | 0.2  |      |   |  | n/m   |     
|                                 |       |   |      |      |      |   |          |      |          |   |      |      |   |  |       |     
|                                 | Total |   | $    | 37.8 |      |   | $        | 40.2 |          |   | $    | (2.4 | ) |  |       | (6.0 | )%
|                                 |       |   |      |      |      |   |          |      |          |   |      |      |   |  |       |     

Operating expenses were $13.6 million and $24.9 million for the quarter and six
months ended June 30, 2002, respectively, compared to $14.3 million and $25.4
million for the quarter and six months ended June 30, 2001. The decrease in
the quarter and six-month period was primarily due to one-time costs incurred
in 2001 of $0.7 million for our share of potential losses related to prior
CenDon Partnership receivable write-offs in excess of amounts provided for by
the Partnership.

General and administrative expenses were $4.5 million and $9.5 million for the
quarter and six months ended June 30, 2002, respectively, compared to $5.0
million and $9.2 million for the quarter and six months ended June 30, 2001.
The decrease in general and administrative expenses in the quarter was
principally due to lower consulting costs. The increase in general and
administrative expenses for the year-to-date period was primarily due to
relocation costs in connection with the executive management transition ($0.4
million) and higher payroll taxes and employee benefit costs ($0.4 million)
partially offset by lower consulting costs ($0.5 million).

Depreciation and amortization expense was $1.6 million and $3.2 million for the
quarter and six months ended June 30, 2002, respectively, compared to $2.7
million and $5.6 million for the quarter and six months ended June 30, 2001.
The decrease in the quarter and year-to-date periods was primarily due to the
original investment in the Raleigh Information Center being fully depreciated
by the end of 2001.

In the second quarter 2002, additional expenses of $0.2 million were incurred
in connection with our executive management transition and restructuring plan
announced at the end of 2001. Certain amounts included in the 2001
restructuring and special charge were estimates made by management based on the
best information available at the time. Actual amounts paid can differ from
these estimates and these differences are recognized as current period expense
or income. The $0.2 million of expense represents the net of $0.3 million of
retirement benefits paid in connection with the executive management transition
over the amount originally reserved for offset by the reversal of $0.1 million
for professional fees, as the actual amount of fees paid was less than the
amount originally reserved.

Operating Income

Operating income for DonTech includes our 50% interest in the net income of
DonTech and revenue participation income, but does not include an allocation of
certain general and administrative expenses incurred to support this business.
Operating income for DAS includes the operating results of each of the included
business units, less an allocation of certain shared expenses based on
estimated business usage. General & Corporate represents overhead and
administrative costs not allocated to the DAS business units. Operating income
by segment was as follows:
19Table of Contents

|                                 |                          |   |      |      |      |   |          |      |          |   |      |     |  |  |      |     |  
|-------------------------------- | ------------------------ | - | ---- | ---- | ---- | - | -------- | ---- | -------- | - | ---- | --- |  |  | ---- | --- | -
|                                 |                          |   | 2002 |      | 2001 |   | $ Change |      | % Change
|                                 |                          |   |      |      |      |   |          |      |         
|Quarter ended June 30,           |                          |   |      |      |      |   |          |      |          |   |      |     |  |  |      |    
|                                
|                                
|                                
|                                
|DonTech                          |                          | $ | 36.6 |      |      | $ | 37.1     |      |          | $ | (0.5 | )   |  |  | (1.3 | )% 
|                                
|                                
|                                
|                                
|DAS                              |                          |   | 7.8  |      |      |   | 6.0      |      |          |   | 1.8  |     |  |  | 30.0 |    
|                                
|                                
|                                
|                                
|General & Corporate              |                          |   | (3.8 | )    |      |   | (3.9     | )    |          |   | 0.1  |     |  |  | 2.6  |    
|                                 |                          |   |      |      |      |   |          |      |          |   |      |     |  |  |      |    
|                                 | Segment Operating Income |   |      | 40.6 |      |   |          | 39.2 |          |   |      | 1.4 |  |  |      | 3.6 |  
|                                
|                                
|                                
|                                
|Restructuring and special
charge |                          |   | (0.2 | )    |      |   |         |      |          |   | (0.2 | )   |  |  | n/m  |    
|                                 |                          |   |      |      |      |   |          |      |          |   |      |     |  |  |      |    
|                                 | Total                    |   | $    | 40.4 |      |   | $        | 39.2 |          |   | $    | 1.2 |  |  |      | 3.1 | %
|                                 |                          |   |      |      |      |   |          |      |          |   |      |     |  |  |      |    
|Six months ended June 30,        |                          |   |      |      |      |   |          |      |          |   |      |     |  |  |      |    
|                                
|                                
|                                
|                                
|DonTech                          |                          | $ | 58.5 |      |      | $ | 59.1     |      |          | $ | (0.6 | )   |  |  | (1.0 | )% 
|                                
|                                
|                                
|                                
|DAS                              |                          |   | 17.6 |      |      |   | 15.5     |      |          |   | 2.1  |     |  |  | 13.5 |    
|                                
|                                
|                                
|                                
|General & Corporate              |                          |   | (7.8 | )    |      |   | (7.7     | )    |          |   | (0.1 | )   |  |  | (1.3 | )  
|                                 |                          |   |      |      |      |   |          |      |          |   |      |     |  |  |      |    
|                                 | Segment Operating Income |   |      | 68.3 |      |   |          | 66.9 |          |   |      | 1.6 |  |  |      | 2.4 |  
|                                
|                                
|                                
|                                
|Restructuring and special
charge |                          |   | (0.2 | )    |      |   |         |      |          |   | (0.2 | )   |  |  | n/m  |    
|                                 |                          |   |      |      |      |   |          |      |          |   |      |     |  |  |      |    
|                                 | Total                    |   | $    | 68.1 |      |   | $        | 66.9 |          |   | $    | 1.4 |  |  |      | 2.1 | %
|                                 |                          |   |      |      |      |   |          |      |          |   |      |     |  |  |      |    

Operating income was $40.4 million and $68.1 million for the quarter and six
months ended June 30, 2002, respectively, compared to $39.2 million and $66.9
million for the quarter and six months ended June 30, 2001. The increase in
operating income for the quarter and six-month periods was primarily driven by
higher DAS operating income partially offset by lower operating income from
DonTech. See Partnership and Joint Venture Income above for an explanation
of the decrease in DonTech operating income. For the quarter, DAS operating
income increased $1.8 million primarily due to lower depreciation and
amortization expense of $1.1 million as the investment in the Raleigh
Information Center was fully depreciated by the end of 2001 and the one-time
costs of $0.7 million in 2001 for our share of potential losses related to
prior CenDon Partnership receivable write-offs in excess of amounts provided
for by the Partnership. DAS operating income for the six-month period
increased $2.1 million due to lower depreciation and amortization expense of
$2.2 million and the one-time costs associated with prior CenDon Partnership
matters, partially offset by the $0.9 million decline in publishing revenue
resulting from lower volumes.

Interest and Taxes

Net interest expense was $5.9 million and $11.9 million for the quarter and six
months ended June 30, 2002, respectively, compared to $6.2 million and $12.8
million for the quarter and six months ended June 30, 2001. The quarter and
year-to-date decrease in 2002 was primarily due to lower average outstanding
debt levels as we continue to use excess cash to prepay our debt.

The effective tax rate for the quarter and six months ended June 30, 2002 was
38.5% compared to 37.5% for the quarter and six months ended June 30, 2001.
The increase in the effective tax rate was due to changes in state
apportionment factors.

Extraordinary Loss

In the second quarter of 2002, we prepaid $7.5 million of debt and through the
first six months of 2002, we prepaid $42.5 million of debt. The extraordinary
loss recognized in the quarter and six-month period related to the write-off of
related deferred financing costs. The extraordinary loss had no impact on
diluted earnings per share for the quarter or year-to-date periods in 2002.

Net Income and Earnings Per Share

Net income for the second quarter 2002 was $21.2 million, or $0.70 per diluted
share compared to net income of $20.6 million, or $0.66 per diluted share for
the second quarter 2001. For the six month period ended June 30, 2002, net
income was $34.4 million, or $1.14 per diluted share compared to net income of
$33.5 million, or $1.06 per diluted share for the six months ended June 30,
2001.

LIQUIDITY AND CAPITAL RESOURCES

Our primary source of liquidity is cash flows from operations. Additionally,
at June 30, 2002, we had available $100 million under our $100 million Senior
Revolving Credit Facility (the Revolver). We believe that cash flows
generated from operations and the available borrowing capacity under the
Revolver will be sufficient to fund our operations and meet our obligations to
our employees, vendors and creditors for at least the next 12 to 24 months.
Our sources of cash flow are primarily from revenue participation, priority
distribution and sales commission payments

20



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##### Table of Contents



received from SBC and Sprint. These payments are all directly dependent on the
value of advertising sold and can be impacted by, among other factors,
competition in our markets, general economic conditions and the level of demand
for yellow pages advertising. Management believes that if advertising sales
were to decline by 10%, cash flow from operations, together with the available
borrowing capacity under the Revolver, would still be sufficient to fund our
operations and meet our obligations to our employees, vendors and creditors for
at least the next 12 to 24 months. See Forward-Looking Information  Use of
Cash Flow.

In addition, as the publisher of the respective directories, Sprint and SBC are
responsible for and consequently control many of the critical functions and
decisions that can impact our results and the results of DonTech. While it has
not historically been the case, their respective policies, decisions and
performance of their respective obligations in these areas, in which we have
little or no participation or influence, could have a material adverse effect
on our results of operations or financial condition. See Forward-Looking
Information  Dependence on our Business Partners.

Sprint has publicly announced that it is considering divesting its directory
publishing operations. We do not believe that any sale or change in control of
the Sprint directory operations would have a material adverse effect on our
results of operations or financial condition because we believe all of our
contractual rights related to serving as sales agent in the Central Florida and
CenDon markets would survive any such sale or change in control. In addition,
our CenDon agreements specifically obligate Sprint (and any successor) to
indemnify us against any material damages we suffer as a result of any changes
in policies, practices and procedures from those in existence at the time of
the restructuring of the CenDon relationship (June 30, 2000). We believe that
this indemnity significantly protects us against any potential material adverse
effects from any such sale or change in control with respect to the CenDon
markets.

During the first six months of 2002, we generated $28.2 million of cash flow
from operations compared to $34.7 million during the first six months of 2001.
The decrease of $6.5 million was primarily due to the net effect of payments of
$13.1 million related to the restructuring and special charge recorded in 2001
(see Note 5 in Item 1 Financial Statements) and $4.0 million less in cash
received from partnerships and joint ventures. Cash received from partnerships
and joint ventures in 2001 included $6.3 million from the CenDon Partnership as
the partnership continued to collect its receivables and distribute cash to the
partners. There were no cash distributions from the CenDon Partnership
received in 2002. These decreases were partially offset by lower tax payments
of $5.3 million due to timing and payments of $5.2 million in 2001 for
severance and other costs related to the disposition of the Bell Atlantic,
Cincinnati and Get Digital Smart businesses in 2000. We expect cash outflows
related to our 2001 restructuring and special charge to be approximately $1.0
million to $1.5 million for the remainder of the year, mainly relating to the
idle leased space in the Raleigh facility and severance. The majority of the
announced layoffs related to the expiration of the pre-press publishing
contract will occur in the fourth quarter. There are no payments remaining for
the executive management transition.

Cash used in investing activities for the first half of 2002 was $1.3 million,
which consisted of fixed assets and computer software purchases. Cash used in
investing activities for the prior year period was $3.5 million, which included
a $1.6 million investment in ChinaBig in accordance with our contractual
obligations. This payment represented our final required investment in
ChinaBig. We currently have no material commitments for investment spending or
capital expenditures.

Net cash used in financing activities was $39.2 million for the first half of
2002 compared to $79.0 million in the first half of 2001. The decrease in cash
used for financing activities is primarily due to the repurchase of $32.5
million of our common stock during the first half of 2001 compared to no
repurchases of our common stock during the first half of 2002. As previously
reported, certain telecommunications companies have publicly announced their
intent to consider or explore divesting their respective directory publishing
operations. We intend to carefully evaluate these potential growth
opportunities within our line of business. During our evaluation of these
opportunities, we have suspended our share repurchase programs and currently
intend to apply excess cash flow to repay debt. See Forward Looking
Information  Use of Cash Flow.

21



---



##### Table of Contents






Item 3. Quantitative and Qualitative Disclosure About Market Risk

Risk Management

We borrow funds under our Senior Secured Term Facilities (Term Facilities)
and Revolver at prevailing short-term rates. To mitigate our exposure to
fluctuating short-term interest rates, we have an outstanding interest rate
swap with a notional value of $75 million whereby we pay a fixed rate and
receive a variable rate based on 3-month LIBOR. In June 2002, an interest rate
swap with a notional value of $50 million expired and due to the reduced level
of indebtedness, we did not, nor do we presently intend to replace the interest
rate swap.

The outstanding interest rate swap exposes us to credit risk in the event that
we are in a net gain position and the counterparty to the agreement does not,
or can not meet their obligation. The notional amount is used to measure
interest to be paid or received and does not represent the amount of exposure
to credit loss. The loss would be limited to the amount that would have been
received, if any, over the remaining life of the swap agreement. At June 30,
2002, we were in a net loss position (see Market Risk Sensitive Instruments
below), and therefore, were not exposed to credit risk. The counterparty to
the swap is a major financial institution and, had we been in a net gain
position, we would expect this counterparty to be able to perform its
obligations under the swap. We use derivative financial instruments for
hedging purposes only and not for trading or speculative purposes.

Market Risk Sensitive Instruments

The interest rate swap has been designated as a cash flow hedge. In accordance
with FAS 133, the fair value of the swap is recognized in other comprehensive
income, a component of shareholders equity. The fair value of the swap was
based on quoted market prices. At June 30, 2002, the unrealized fair value,
which is the difference between what we would have to pay to terminate the
swap, and the book value of the swap, was a loss of $2.5 million ($1.6 million,
after tax). This loss was recognized in the consolidated balance sheet as
other non-current liabilities and accumulated other comprehensive loss, a
component of shareholders deficit.

22



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##### Table of Contents






PART II. OTHER INFORMATION




Item 1. Legal Proceedings

Reference is made to the discussion of legal proceedings under Item 3 of Part I
in our Annual Report on Form 10-K for the year ended December 31, 2001
(10-K). As of June 30, 2002, there have been no material changes in the
information with respect to legal proceedings from that set forth in the 10-K.
See also Note 8 of the Notes to the Consolidated Financial Statements in Item 1
of Part I of this Quarterly Report on Form 10-Q.

We are also involved in certain legal proceedings incidental to the normal
conduct of our business. Although there can be no assurances, we presently
believe that the outcome of such legal proceedings will not have a material
adverse effect on our results of operations or financial condition.




Item 4. Submission of Matters to a Vote of Security Holders

Our Annual Meeting of Stockholders (Meeting) was held in White Plains, N.Y.
on May 1, 2002. At the Meeting, the Companys stockholders elected the two
Class III Directors nominated for election by the Board of Directors to serve
three-year terms as follows:

|                  |  |           |            |          |  |       |         | 
|----------------- |  | --------- | ---------- | -------- |  | ----- | ------- | 
|                  |  |           |            |          |  | Votes
|Name              |  | Votes For |            | Withheld
|                  |  |           |            |         
|Peter J. McDonald |  |           | 26,435,287 |          |  |       | 296,095 | 
|                 
|                 
|                 
|                 
|Frank R. Noonan   |  |           | 26,556,024 |          |  |       | 175,358 | 

William G. Jacobi did not stand for re-election and therefore the Board of
Directors now comprises seven members. The other members of our Board of
Directors (Kenneth G. Campbell, Robert Kamerschen, Carol J. Parry, David C.
Swanson and Barry Lawson Williams) were not subject to re-election by
stockholders this year and continue in office.

At the Meeting, the Companys stockholders also ratified the appointment of
PricewaterhouseCoopers LLP (PwC) to serve as our independent accountants for
2002 as follows:

|                                       |  |           |            |               |  |             |         |  |  |  |        | 
|-------------------------------------- |  | --------- | ---------- | ------------- |  | ----------- | ------- |  |  |  | ------ | 
|                                       |  | Votes For |            | Votes Against |  | Abstentions
|                                       |  |           |            |               |  |            
|Ratification of the appointment of PwC |  |           | 26,053,915 |               |  |             | 660,394 |  |  |  | 17,073 | 

23



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##### Table of Contents






Item 6. Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits:
| | --- |  | ---------

|            |  |                                                                                                                                                                                                                                                                                                                                                                                              
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Document                                                                                                                                                                                                                                                                                                                                                                                     
|3.1         |  | Certificate of Incorporation of the Company (incorporated by reference to
Exhibit 3.1 to the Quarterly Report on Form 10-Q for the three months ended
March 31, 1999, Commission File No. 001-07155)                                                                                                                                                                                         
|           
|           
|           
|           
|3.2         |  | By-laws of the Company (incorporated by reference to Exhibit 3.2 to the
Quarterly Report on Form 10-Q for the three months ended March 31, 1999,
Commission File No. 001-07155)                                                                                                                                                                                                              
|           
|           
|           
|           
|3.3         |  | Certificate of Incorporation of R.H. Donnelley Inc. (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)                                                                                                                                 
|           
|           
|           
|           
|3.4         |  | By-laws of R.H. Donnelley Inc. (incorporated by reference to Exhibit 3.4 to
the 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 June 5, 1998 between R.H. Donnelley Inc., as Issuer,
the Company, as Guarantor, and the Bank of New York, as Trustee, with respect
to the 91/8% Senior Subordinated Notes due 2008 (incorporated by reference to
Exhibit 4.1 to the Registration Statement on Form S-4, filed with the
Securities and Exchange Commission on July 17, 1998, Registration No.
333-59287)
|           
|           
|           
|           
|4.2         |  | Form of the 91/8% Senior Subordinated Notes due 2008 (included in Exhibit 4.1)                                                                                                                                                                                                                                                                                                               
|           
|           
|           
|           
|4.3         |  | Company Guarantee (included in Exhibit 4.1)                                                                                                                                                                                                                                                                                                                                                  
|           
|           
|           
|           
|4.4         |  | Rights Agreement, dated as of October 27, 1998 between R.H. Donnelley
Corporation and First Chicago Trust Company (incorporated by reference to
Exhibit 4 to the Registration Statement on Form 8-A, filed with the
Securities and Exchange Commission on November 5, 1998, Registration No.
001-07155)                                                                                      
|           
|           
|           
|           
|4.5         |  | Amendment No. 1 to Rights Agreement dated as of February 26, 2001 by and
among R.H. Donnelley Corporation, First Chicago Trust Company of New York (as
initial Rights Agent) and The Bank of New York (as successor Rights Agent)
(incorporated by reference to Exhibit 4.5 to the Annual Report on Form 10-K
for the year ended December 31, 2000, Commission File No. 001-07155)           
|           
|           
|           
|           
|10.1        |  | Form of Distribution Agreement between the Company (f/k/a The Dun &
Bradstreet Corporation) and The New Dun & Bradstreet Corporation
(incorporated by reference to Exhibit 99.2 to the Form 8-K of the Company
(f/k/a The Dun & Bradstreet Corporation), filed on June 30, 1998, Commission
File No. 001-07155)                                                                              
|           
|           
|           
|           
|10.2        |  | Form of Tax Allocation Agreement between the Company (f/k/a The Dun &
Bradstreet Corporation) and The New Dun & Bradstreet Corporation
(incorporated by reference to Exhibit 99.3 to the Form 8-K of the Company
(f/k/a The Dun & Bradstreet Corporation), filed on June 30, 1998, Commission
File No. 001-07155)                                                                            

24



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##### Table of Contents



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Document                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|           
|           
|           
|           
|10.3        |  | Form of Employee Benefits Agreement between the Company (f/k/a
The Dun & Bradstreet Corporation) and The New Dun & Bradstreet
Corporation (incorporated by reference to Exhibit 99.4 to the
Form 8-K of the Company (f/k/a The Dun & Bradstreet
Corporation), filed on June 30, 1998, Commission File No.
001-07155)                                                                                                                                                                                                                                                                                      
|           
|           
|           
|           
|10.4        |  | Form of Intellectual Property Agreement between the Company
(f/k/a The Dun & Bradstreet Corporation) and The New Dun &
Bradstreet Corporation (incorporated by reference to Exhibit
99.5 to the Form 8-K of the Company (f/k/a The Dun &
Bradstreet Corporation), filed on June 30, 1998, Commission
File No. 001-07155)                                                                                                                                                                                                                                                                                  
|           
|           
|           
|           
|10.5        |  | Form of Amended and Restated Transition Services Agreement
between the Company (f/k/a The Dun & Bradstreet Corporation),
The New Dun & Bradstreet Corporation, Cognizant Corporation,
IMS Health Incorporated, ACNielsen Corporation and Gartner
Group, Inc. (incorporated by reference to Exhibit 99.9 to the
Form 8-K of the Company (f/k/a The Dun & Bradstreet
Corporation), filed on June 30, 1998, Commission File No.
001-07155)                                                                                                                                                                   
|           
|           
|           
|           
|10.6        |  | Credit Agreement among the Company, R.H. Donnelley Inc., The
Chase Manhattan Bank, as Administrative Agent and the Lenders
party thereto (incorporated by reference to Exhibit 10.9 to
the Registration Statement on Form S-4, filed with the
Securities and Exchange Commission on July 17, 1998,
Registration No. 333-59287)                                                                                                                                                                                                                                                                            
|           
|           
|           
|           
|10.7        |  | First Amendment to Credit Agreement, dated as of March 4,
1999, among the Company, R.H. Donnelley Inc., The Chase
Manhattan Bank, as Administrative Agent, and the Lenders party
thereto (incorporated by reference to Exhibit 10.1 to the
Quarterly Report on Form 10-Q for the three months ended March
31, 1999, Commission File No. 001-07155)                                                                                                                                                                                                                                                        
|           
|           
|           
|           
|10.8        |  | DonTech II Partnership Agreement, effective August 19, 1997,
by and between R.H. Donnelley Inc. (f/k/a The Reuben H.
Donnelley Corporation) and Ameritech Publishing of Illinois,
Inc. (incorporated by reference to Exhibit 10.10 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)                                                                                                                                                                                                         
|           
|           
|           
|           
|10.9        |  | Revenue Participation Agreement, dated as of August 19, 1997,
by and between APIL Partners Partnership and R.H. Donnelley
Inc. (f/k/a The Reuben H. Donnelley Corporation) (incorporated
by reference to Exhibit 10.11 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)                                                                                                                                                                                                                     
|           
|           
|           
|           
|10.10       |  | Master Agreement, executed August 19, 1997, by and among R.H.
Donnelley Inc. (f/k/a The Reuben H. Donnelley Corporation),
the Company (f/k/a The Dun & Bradstreet Corporation), The
Am-Don Partnership a/k/a DonTech, DonTech II, Ameritech
Publishing, Inc., Ameritech Publishing of Illinois, Inc.,
Ameritech Corporation, DonTech I Publishing Company LLC and
the APIL Partners Partnership (incorporated by reference to
Exhibit 10.12 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)
|           
|           
|           
|           
|10.11       |  | Exclusive Sales Agency Agreement, effective August 19, 1997,
between APIL Partners Partnership and DonTech II (incorporated
by reference to Exhibit 10.13 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)                                                                                                                                                                                                                                                                                  

25



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##### Table of Contents



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Document                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|           
|           
|           
|           
|10.12       |  | Second Amended and Restated Partnership Agreement, effective
as of August 19, 1997, by and between R.H. Donnelley Inc.
(f/k/a The Reuben H. Donnelley Corporation) and Ameritech
Publishing of Illinois (incorporated by reference to Exhibit
10.14 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)                                                                         
|           
|           
|           
|           
|10.13       |  | Agreement for Publishing Services, dated as of January 1, 2002
between Ameritech Publishing Inc. and R.H. Donnelley Inc.
(incorporated by reference to Exhibit 10.13 to the Companys
Quarterly Report on Form 10-Q for the three months ended March
31, 2002, Commission File No. 001-07155) (certain portions of
this exhibit have been omitted and filed separately with the
Securities and Exchange Commission pursuant to an Application
for an Order Granting Confidential Treatment)
|           
|           
|           
|           
|10.14*      |  | Limited Liability Company Agreement of CenDon, L.L.C. dated
April 27, 2000 between R.H. Donnelley Inc. and Centel
Directory Company (certain portions of this exhibit have been
omitted and filed separately with the Securities and Exchange
Commission pursuant to an Application for an Order Granting
Confidential Treatment)                                                                                                                                                          
|           
|           
|           
|           
|10.15*      |  | Sales Agency Agreement dated April 27, 2000 among R.H.
Donnelley Inc., Centel Directory Company and CenDon, L.L.C.                                                                                                                                                                                                                                                                                                                                                                         
|           
|           
|           
|           
|10.16*      |  | Agreement for Publishing Services dated April 27, 2000 between
R.H. Donnelley and CenDon, L.L.C. (certain portions of this
exhibit have been omitted and filed separately with the
Securities and Exchange Commission pursuant to an Application
for an Order Granting Confidential Treatment)                                                                                                                                                                                             
|           
|           
|           
|           
|10.17^      |  | Key Employees Performance Unit Plan, as amended and restated
(incorporated by reference to Exhibit 10.15 to Amendment No. 3
to the Registration Statement on Form
S-4, filed with the Securities and Exchange Commission on
September 28, 1998, Registration No. 333-59287)                                                                                                                                                                                                               
|           
|           
|           
|           
|10.18^      |  | 1991 Key Employees Stock Option Plan, as amended and restated
through April 25, 2000 (incorporated by reference to Exhibit
10.17 to the Companys Quarterly Report on Form 10-Q for the
three months ended September 30, 2000, Commission File No.
001-07155)                                                                                                                                                                                                                             
|           
|           
|           
|           
|10.19^      |  | Amended and Restated 1998 Directors Stock Plan (incorporated
by reference to Exhibit 10.18 to the Companys Annual Report
on Form 10-K for the year ended December 31, 1999, Commission
File No. 001-07155)                                                                                                                                                                                                                                                                               
|           
|           
|           
|           
|10.20^      |  | Pension Benefit Equalization Plan (incorporated by reference
to Exhibit 10.16 to the Companys Annual Report on Form 10-K
for the year ended December 31, 2001, Commission File No.
001-07155)                                                                                                                                                                                                                                                                                             
|           
|           
|           
|           
|10.21^      |  | 2001 Stock Award and Incentive Plan (incorporated by reference
to Exhibit 10.17 to the Companys Annual Report on Form 10-K
for the year ended December 31, 2001, Commission File No.
001-07155)                                                                                                                                                                                                                                                                                           
|           
|           
|           
|           
|10.22^      |  | 2001 Partner Share Plan (incorporated by reference to Exhibit
99.1 to Registration Statement on Form S-8, filed with the
Securities and Exchange Commission on April 30, 2001,
Registration No. 333-59790)                                                                                                                                                                                                                                                                                 

26



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##### Table of Contents



|            |  |                                                                                                                                                                                                                                                                               
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Document                                                                                                                                                                                                                                                                      
|           
|           
|           
|           
|10.23^      |  | Form of Non-Qualified Stock Option Agreement (incorporated by
reference to Exhibit 99.02 to Registration Statement on Form
S-8, filed with the Securities and Exchange Commission on
July, 25, 2001, Registration No. 333-65822)                                              
|           
|           
|           
|           
|10.24^      |  | Form of Annual Incentive Program Award (incorporated by
reference to Exhibit 99.03 to Registration Statement on Form
S-8, filed with the Securities and Exchange Commission on
July, 25, 2001, Registration No. 333-65822)                                                    
|           
|           
|           
|           
|10.25^      |  | Form of Performance Unit Program Award (incorporated by
reference to Exhibit 99.04 to Registration Statement on Form
S-8, filed with the Securities and Exchange Commission on
July, 25, 2001, Registration No. 333-65822)                                                    
|           
|           
|           
|           
|10.26^      |  | Deferred Compensation Plan (incorporated by reference to
Exhibit 4.01 to the Companys Registration Statement on Form
S-8, filed with the Securities and Exchange Commission on
November 24, 1999, Registration No. 333-91613)                                                
|           
|           
|           
|           
|10.27^      |  | Amended and Restated Employment Agreement dated as of December
27, 2001 between the Company and Frank R. Noonan (incorporated
by reference to Exhibit 10.23 to the Companys Annual Report
on Form 10-K for the year ended December 31, 2001, Commission
File No. 001-07155)  
|           
|           
|           
|           
|10.28^      |  | Amended and Restated Employment Agreement dated as of December
27, 2001 between the Company and Philip C. Danford
(incorporated by reference to Exhibit 10.24 to the Companys
Annual Report on Form 10-K for the year ended December 31,
2001, Commission File No. 001-07155)
|           
|           
|           
|           
|10.29^*     |  | Employment Agreement effective as of May 1, 2002 between the
Company and David C. Swanson                                                                                                                                                                                     
|           
|           
|           
|           
|10.30^*     |  | Employment Agreement effective March 1, 2002 between the
Company and Steven M. Blondy                                                                                                                                                                                         
|           
|           
|           
|           
|10.31^      |  | Employment Agreement dated as of September 28, 1998 between
the Company and Frank M. Colarusso (incorporated by reference
to Exhibit 10.32 to the Annual Report on Form 10-K for the
year ended December 31, 2000, Commission File No. 001-07155)                             
|           
|           
|           
|           
|10.32^      |  | Amendment No. 1 to Employment Agreement dated as of July 27,
2000 between the Company and Frank M. Colarusso (incorporated
by reference to Exhibit 10.33 to the Annual Report on Form
10-K for the year ended December 31, 2000, Commission File No.
001-07155)               
|           
|           
|           
|           
|10.33^      |  | Amendment No. 2 to Employment Agreement dated as of February
27, 2001 between the Company and Frank M. Colarusso
(incorporated by reference to Exhibit 10.34 to the Annual
Report on Form 10-K for the year ended December 31, 2000,
Commission File No. 001-07155)           
|           
|           
|           
|           
|10.34^      |  | Employment Agreement dated as of September 26, 2000 between
the Company and William C. Drexler (incorporated by reference
to Exhibit 10.35 to the Annual Report on Form 10-K for the
year ended December 31, 2000, Commission File No. 001-07155)                             

27



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##### Table of Contents



|            |  |                                                                                                                                                                                                                                                                    
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Document                                                                                                                                                                                                                                                           
|           
|           
|           
|           
|10.35^      |  | Amendment No. 1 to Employment Agreement dated as of February
27, 2001 between the Company and William C. Drexler
(incorporated by reference to Exhibit 10.36 to the Annual
Report on Form 10-K for the year ended December 31, 2000,
Commission File No. 001-07155)
|           
|           
|           
|           
|10.36^      |  | Employment Agreement dated as of January 1, 2001 between the
Company and Robert J. Bush (incorporated by reference to
Exhibit 10.37 to the Annual Report on Form 10-K for the year
ended December 31, 2000, Commission File No. 001-07155)                         
|           
|           
|           
|           
|10.37^      |  | Amendment No. 1 to Employment Agreement dated as of February
27, 2001 between the Company and Robert J. Bush (incorporated
by reference to Exhibit 10.38 to the Annual Report on Form
10-K for the year ended December 31, 2000, Commission File No.
001-07155)    
|           
|           
|           
|           
|10.38^      |  | Separation Agreement and Release dated as of March 15, 2001
between the Company and Judith A. Norton (incorporated by
reference to Exhibit 10.29 to the Annual Report on Form 10-K
for the year ended December 31, 2000, Commission File No.
001-07155)            
|           
|           
|           
|           
|21          |  | Subsidiaries of the Company (incorporated by reference to
Exhibit 21 to the Annual Report on Form 10-K for the year
ended December 31, 2000, Commission File No. 001-07155)                                                                                        
|           
|           
|           
|           
|99.1*       |  | Certification of Quarterly Report on Form 10-Q for the period
ended June 30, 2002 by David C. Swanson, Chief Executive
Officer                                                                                                                                     
|           
|           
|           
|           
|99.2*       |  | Certification of Quarterly Report on Form 10-Q for the period
ended June 30, 2002 by Steven M. Blondy, Senior Vice President
and Chief Financial Officer                                                                                                           



---

|* |  | Filed herewith                          
|- |  | ----------------------------------------
| 
| 
| 
| 
|^ |  | Management contract or compensatory plan



| | (b) |  | Reports on Form 8-K:
| | --- |  | --------------------
|
| |     |  | None                

28



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                      |  |     |  |                                                                   
|--------------------- |  | --- |  | ------------------------------------------------------------------
|Date: August 14, 2002 |  | By: |  | R.H. DONNELLEY
CORPORATION                                        
|                     
|                     
|                     
|                     
|                      |  |     |  |                                                                   
|                     
|                     
|                     
|                     
|                      |  |     |  | /s/ Steven M. Blondy                                              
|                      |  |     |  |                                                                   
|                      |  |     |  | Steven M. Blondy
Senior Vice President and Chief Financial Officer
|                     
|                     
|                     
|                     
|                      |  |     |  |                                                                   
|                     
|                     
|                     
|                     
|Date: August 14, 2002 |  | By: |  | /s/ William C. Drexler                                            
|                      |  |     |  |                                                                   
|                      |  |     |  | William C. Drexler
Vice President and Controller                  

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                      |  |     |  |                                                                   
|--------------------- |  | --- |  | ------------------------------------------------------------------
|Date: August 14, 2002 |  | By: |  | R.H. DONNELLEY INC.                                               
|                     
|                     
|                     
|                     
|                      |  |     |  |                                                                   
|                     
|                     
|                     
|                     
|                      |  |     |  | /s/ Steven M. Blondy                                              
|                      |  |     |  |                                                                   
|                      |  |     |  | Steven M. Blondy
Senior Vice President and Chief Financial Officer
|                     
|                     
|                     
|                     
|                      |  |     |  |                                                                   
|                     
|                     
|                     
|                     
|Date: August 14, 2002 |  | By: |  | /s/ William C. Drexler                                            
|                      |  |     |  |                                                                   
|                      |  |     |  | William C. Drexler
Vice President and Controller                  

29