##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549




---

Form 10-Q

|   |  |                                                                                                 
|-- |  | ------------------------------------------------------------------------------------------------
|þ  |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934 
|  
|   |  | For the quarterly period ended
    September 30, 2004                                           
|OR
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13
    or 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
|  
|   |  | For the transition period
    from           to                                                 

Commission File Number: 333-112694

Dex Media West LLC

(Exact name of registrant as specified in its
charter)


|                                                                   |  |                                      
|------------------------------------------------------------------ |  | -------------------------------------
|Delaware                                                           |  | 25-1903487                           
|(State or other jurisdiction of
    incorporation or organization) |  | (IRS Employer
    Identification No.)

198 Inverness Drive West

Englewood, Colorado


80112


(Address of principal executive
offices)


(303) 784-2900

(Registrants telephone number, including
area code)




---

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Section 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.     Yes þ          No o

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Rule 12b-2 of the
Exchange
Act).     Yes o          No þ



---






---










INDEX

|                                             |  |                                                                                                                                                                                                                         |    |      |    | 
|-------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                                             |  |                                                                                                                                                                                                                         |    | Page
|                                             |  |                                                                                                                                                                                                                         |    | Nos.
|                                             |  |                                                                                                                                                                                                                         |    |     
|PART I: FINANCIAL
    INFORMATION            |  |                                                                                                                                                                                                                         | 2  |     
|Item 1.                                      |  | Financial Statements                                                                                                                                                                                                    |    |      | 2  | 
|                                             |  | Condensed Consolidated
    Balance Sheets (unaudited)  September 30, 2004
    and December 31, 2003                                                                                                                    |    |      | 2  | 
|                                             |  | Condensed Consolidated
    Statements of Operations (unaudited)  Three Months
    Ended September 30, 2004, and for the Periods from
    September 10 to September 30, 2003 and from
    July 1 to September 9, 2003   |    |      | 3  | 
|                                             |  | Condensed Consolidated
    Statements of Operations (unaudited)  Nine Months
    Ended September 30, 2004, and for the Periods from
    September 10 to September 30, 2003 and from January 1
    to September 9, 2003 |    |      | 4  | 
|                                             |  | Condensed Consolidated
    Statements of Cash Flows (unaudited)  Nine Months
    Ended September 30, 2004, and for the Periods from
    September 10 to September 30, 2003 and from January 1
    to September 9, 2003 |    |      | 5  | 
|                                             |  | Notes to Condensed
    Consolidated Financial Statements (unaudited)                                                                                                                                                    |    |      | 6  | 
|Item 2.                                      |  | Managements Discussion
    and Analysis of Financial Condition and Results of Operations                                                                                                                               |    |      | 17 | 
|Item 3.                                      |  | Quantitative and Qualitative
    Disclosures about Market Risk                                                                                                                                                          |    |      | 34 | 
|Item 4.                                      |  | Controls and Procedures                                                                                                                                                                                                 |    |      | 34 | 
|PART II: OTHER
    INFORMATION               |  |                                                                                                                                                                                                                         | 35 |     
|Item 1.                                      |  | Legal Proceedings                                                                                                                                                                                                       |    |      | 35 | 
|Item 2.                                      |  | Unregistered Sales of Equity
    Securities and Use of Proceeds                                                                                                                                                         |    |      | 35 | 
|Item 3.                                      |  | Defaults upon Senior
    Securities                                                                                                                                                                                     |    |      | 35 | 
|Item 4.                                      |  | Submission of Matters to a
    Vote of Security Holders                                                                                                                                                                 |    |      | 35 | 
|Item 5.                                      |  | Other Information                                                                                                                                                                                                       |    |      | 35 | 
|Item 6.                                      |  | Exhibits                                                                                                                                                                                                                |    |      | 35 | 
|Signature                                    |  |                                                                                                                                                                                                                         | 36 |     
|Certification of CEO Pursuant to Section 302
|Certification of CFO Pursuant to Section 302
|Certification of CEO Pursuant to Section 906
|Certification of CFO Pursuant to Section 906



1



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##### Table of Contents






PART I.

FINANCIAL INFORMATION






|        |                     
|------- | --------------------
|Item 1. | Financial Statements

DEX MEDIA WEST LLC

AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF DEX
MEDIA, INC.





CONDENSED CONSOLIDATED BALANCE
SHEETS


(Dollars in thousands)


(Unaudited)


|                                                                                              |                                        |                                      |           |              |           |  |           |         |           | 
|--------------------------------------------------------------------------------------------- | -------------------------------------- | ------------------------------------ | --------- | ------------ | --------- |  | --------- | ------- | --------- | 
|                                                                                              |                                        | As of                                |           | As of       
|                                                                                              |                                        | September 30,                        |           | December 31,
|                                                                                              |                                        | 2004                                 |           | 2003        
|                                                                                              |                                        |                                      |           |             
|ASSETS                                                                                       
|Current assets:                                                                               |                                        |                                      |           |              |           |  |           |        
|                                                                                              | Cash and cash equivalents              |                                      | $         | 2,915        |           |  | $         | 4,658   |          
|                                                                                              | Accounts receivable, net               |                                      |           | 62,721       |           |  |           | 53,114  |          
|                                                                                              | Deferred directory costs               |                                      |           | 167,484      |           |  |           | 142,293 |          
|                                                                                              | Current deferred taxes                 |                                      |           | 3,396        |           |  |           | 3,876   |          
|                                                                                              | Other current assets                   |                                      |           | 6,664        |           |  |           | 5,461   |          
|                                                                                              |                                        |                                      |           |              |           |  |           |        
|                                                                                              |                                        | Total current assets                 |           |              | 243,180   |  |           |         | 209,402   | 
|Property, plant and equipment, net                                                            |                                        |                                      | 50,492    |              |           |  | 38,016    |        
|Goodwill                                                                                      |                                        |                                      | 2,193,401 |              |           |  | 2,198,586 |        
|Intangible assets, net                                                                        |                                        |                                      | 1,727,814 |              |           |  | 1,901,300 |        
|Deferred income taxes                                                                         |                                        |                                      | 15,483    |              |           |  | 13,778    |        
|Deferred financing costs                                                                      |                                        |                                      | 84,810    |              |           |  | 102,794   |        
|Other assets                                                                                  |                                        |                                      | 1,785     |              |           |  | 2,955     |        
|                                                                                              |                                        |                                      |           |              |           |  |           |        
|                                                                                              |                                        | Total Assets                         |           | $            | 4,316,965 |  |           | $       | 4,466,831 | 
|                                                                                              |                                        |                                      |           |              |           |  |           |        
|                                                                                             
|LIABILITIES AND OWNERS EQUITY                                                               
|Current liabilities:                                                                          |                                        |                                      |           |              |           |  |           |        
|                                                                                              | Accounts payable                       |                                      | $         | 18,569       |           |  | $         | 16,694  |          
|                                                                                              | Amounts due to affiliate               |                                      |           | 25,812       |           |  |           | 28,554  |          
|                                                                                              | Deferred revenue and customer deposits |                                      |           | 129,869      |           |  |           | 68,232  |          
|                                                                                              | Accrued interest payable               |                                      |           | 20,001       |           |  |           | 49,405  |          
|                                                                                              | Current portion of long-term debt      |                                      |           | 77,243       |           |  |           | 20,178  |          
|                                                                                              | Other accrued liabilities              |                                      |           | 5,222        |           |  |           | 6,113   |          
|                                                                                              |                                        |                                      |           |              |           |  |           |        
|                                                                                              |                                        | Total current liabilities            |           |              | 276,716   |  |           |         | 189,176   | 
|Long-term debt                                                                                |                                        |                                      | 2,937,557 |              |           |  | 3,182,822 |        
|Amounts due to affiliate related to
    post-retirement and other post-employment obligations |                                        |                                      | 40,337    |              |           |  | 35,519    |        
|Other liabilities                                                                             |                                        |                                      | 211       |              |           |  | 408       |        
|                                                                                              |                                        |                                      |           |              |           |  |           |        
|                                                                                              |                                        | Total Liabilities                    |           |              | 3,254,821 |  |           |         | 3,407,925 | 
|                                                                                              |                                        |                                      |           |              |           |  |           |        
|Commitments and contingencies (Note 9)                                                        |                                        |                                      |           |              |           |  |           |        
|Accumulated deficit                                                                           |                                        |                                      | (29,665   | )            |           |  | (27,808   | )      
|Owners interest                                                                              |                                        |                                      | 1,091,809 |              |           |  | 1,086,714 |        
|                                                                                              |                                        |                                      |           |              |           |  |           |        
|                                                                                              |                                        | Total Owners Equity                 |           |              | 1,062,144 |  |           |         | 1,058,906 | 
|                                                                                              |                                        |                                      |           |              |           |  |           |        
|                                                                                              |                                        | Total Liabilities and Owners Equity |           | $            | 4,316,965 |  |           | $       | 4,466,831 | 
|                                                                                              |                                        |                                      |           |              |           |  |           |        

See accompanying notes to condensed consolidated
financial statements.

2



---



##### Table of Contents



DEX MEDIA WEST LLC

AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF DEX
MEDIA, INC.





CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS


(Dollars in thousands)


(Unaudited)


|                           |                                       |                                |         |               |         |              |         |        |         |   |         |        |        | 
|-------------------------- | ------------------------------------- | ------------------------------ | ------- | ------------- | ------- | ------------ | ------- | ------ | ------- | - | ------- | ------ | ------ | 
|                           |                                       |                                |         |              
|                           |                                       | Company                        |         | Predecessor  
|                           |                                       |                                |         |              
|                           |                                       |                                |         | Period from   |         | Period from 
|                           |                                       | Three Months                   |         | September 10  |         | July 1      
|                           |                                       | Ended                          |         | to            |         | to          
|                           |                                       | September 30,                  |         | September 30, |         | September 9,
|                           |                                       | 2004                           |         | 2003          |         | 2003        
|                           |                                       |                                |         |               |         |             
|Revenue                    |                                       | $                              | 221,696 |               |         | $            | 14,571  |        |         | $ | 172,739 |       
|Operating Expenses:        |                                       |                                |         |               |         |              |         |        |         |   |         |       
|                           | Cost of revenue                       |                                |         | 68,537        |         |              |         | 4,819  |         |   |         | 53,909 |       
|                           | General and administrative expense    |                                |         | 28,499        |         |              |         | 5,502  |         |   |         | 16,613 |       
|                           | Bad debt expense                      |                                |         | 5,540         |         |              |         | 1,857  |         |   |         | 5,439  |       
|                           | Termination of annual advisory fees   |                                |         | 10,000        |         |              |         |       |         |   |         |       |       
|                           | Depreciation and amortization expense |                                |         | 5,116         |         |              |         | 614    |         |   |         | 3,339  |       
|                           | Amortization of intangibles           |                                |         | 57,829        |         |              |         | 14,068 |         |   |         |       |       
|                           |                                       |                                |         |               |         |              |         |        |         |   |         |       
|                           |                                       | Total operating expenses       |         |               | 175,521 |              |         |        | 26,860  |   |         |        | 79,300 | 
|                           |                                       |                                |         |               |         |              |         |        |         |   |         |       
|                           |                                       | Operating income (loss)        |         |               | 46,175  |              |         |        | (12,289 | ) |         |        | 93,439 | 
|Other (income) expense:    |                                       |                                |         |               |         |              |         |        |         |   |         |       
|                           | Interest income                       |                                |         | (249          | )       |              |         | (102   | )       |   |         | (980   | )     
|                           | Interest expense                      |                                |         | 54,439        |         |              |         | 16,580 |         |   |         | 48,476 |       
|                           | Other expense                         |                                |         | 17            |         |              |         |       |         |   |         |       |       
|                           |                                       |                                |         |               |         |              |         |        |         |   |         |       
|(Loss) income before taxes |                                       |                                | (8,032  | )             |         |              | (28,767 | )      |         |   | 45,943  |       
|                           |                                       | Income tax (benefit) provision |         |               | (3,189  | )            |         |        | (11,190 | ) |         |        | 17,336 | 
|                           |                                       |                                |         |               |         |              |         |        |         |   |         |       
|                           |                                       | Net (loss) income              |         | $             | (4,843  | )            |         | $      | (17,577 | ) |         | $      | 28,607 | 
|                           |                                       |                                |         |               |         |              |         |        |         |   |         |       

See accompanying notes to condensed consolidated
financial statements.

3



---



##### Table of Contents



DEX MEDIA WEST LLC

AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF DEX
MEDIA, INC.





CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS


(Dollars in thousands)


(Unaudited)


|                           |                                       |                                |                          |               |         |              |         |        |         |         |         |         |         |         | 
|-------------------------- | ------------------------------------- | ------------------------------ | ------------------------ | ------------- | ------- | ------------ | ------- | ------ | ------- | ------- | ------- | ------- | ------- | ------- | 
|                           |                                       |                                |                          |              
|                           |                                       | Company                        |                          | Predecessor  
|                           |                                       |                                |                          |              
|                           |                                       |                                |                          | Period from   |         | Period from 
|                           |                                       | Nine Months                    |                          | September 10  |         | January 1   
|                           |                                       | Ended                          |                          | to            |         | to          
|                           |                                       | September 30,                  |                          | September 30, |         | September 9,
|                           |                                       | 2004                           |                          | 2003          |         | 2003        
|                           |                                       |                                |                          |               |         |             
|Revenue                    |                                       | $                              | 645,979                  |               |         | $            | 14,571  |        |         | $       | 630,160 |        
|Operating Expenses:        |                                       |                                |                          |               |         |              |         |        |         |         |         |        
|                           | Cost of revenue                       |                                |                          | 198,272       |         |              |         | 4,819  |         |         |         | 193,282 |        
|                           | General and administrative expense    |                                |                          | 74,958        |         |              |         | 5,502  |         |         |         | 55,175  |        
|                           | Bad debt expense                      |                                |                          | 17,367        |         |              |         | 1,857  |         |         |         | 19,066  |        
|                           | Termination of annual advisory fees   |                                |                          | 10,000        |         |              |         |       |         |         |         |        |        
|                           | Depreciation and amortization expense |                                |                          | 13,200        |         |              |         | 614    |         |         |         | 8,153   |        
|                           | Amortization of intangibles           |                                |                          | 173,486       |         |              |         | 14,068 |         |         |         |        |        
|                           |                                       |                                |                          |               |         |              |         |        |         |         |         |        
|                           |                                       |                                | Total operating expenses |               |         | 487,283      |         |        |         | 26,860  |         |         |         | 275,676 | 
|                           |                                       |                                |                          |               |         |              |         |        |         |         |         |        
|                           |                                       |                                | Operating income (loss)  |               |         | 158,696      |         |        |         | (12,289 | )       |         |         | 354,484 | 
|Other (income) expense:    |                                       |                                |                          |               |         |              |         |        |         |         |         |        
|                           |                                       | Interest income                |                          |               | (577    | )            |         |        | (102    | )       |         |         | (2,336  | )      
|                           |                                       | Interest expense               |                          |               | 162,338 |              |         |        | 16,580  |         |         |         | 113,627 |        
|                           |                                       | Other expense                  |                          |               | 17      |              |         |        |        |         |         |         |        |        
|                           |                                       |                                |                          |               |         |              |         |        |         |         |         |        
|(Loss) income before taxes |                                       |                                | (3,082                   | )             |         |              | (28,767 | )      |         |         | 243,193 |        
|                           |                                       | Income tax (benefit) provision |                          |               | (1,225  | )            |         |        | (11,190 | )       |         |         | 91,441  |        
|                           |                                       |                                |                          |               |         |              |         |        |         |         |         |        
|                           |                                       | Net (loss) income              |                          | $             | (1,857  | )            |         | $      | (17,577 | )       |         | $       | 151,752 |        
|                           |                                       |                                |                          |               |         |              |         |        |         |         |         |        

See accompanying notes to condensed consolidated
financial statements.

4



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##### Table of Contents



DEX MEDIA WEST LLC

AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF DEX
MEDIA, INC.





CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS


(Dollars in thousands)


(Unaudited)


|                           |                                                           |                                                                                                |                                                  |               |         |              |   |           |            |            |   |          |         |          |  
|-------------------------- | --------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------------------ | ------------- | ------- | ------------ | - | --------- | ---------- | ---------- | - | -------- | ------- | -------- | -
|                           |                                                           |                                                                                                |                                                  |              
|                           |                                                           | Company                                                                                        |                                                  | Predecessor  
|                           |                                                           |                                                                                                |                                                  |              
|                           |                                                           |                                                                                                |                                                  | Period from   |         | Period from 
|                           |                                                           | Nine Months                                                                                    |                                                  | September 10  |         | January 1   
|                           |                                                           | Ended                                                                                          |                                                  | to            |         | to          
|                           |                                                           | September 30,                                                                                  |                                                  | September 30, |         | September 9,
|                           |                                                           | 2004                                                                                           |                                                  | 2003          |         | 2003        
|                           |                                                           |                                                                                                |                                                  |               |         |             
|Operating activities:      |                                                           |                                                                                                |                                                  |               |         |              |   |           |            |            |   |         
|                           | Net (loss) income                                         |                                                                                                | $                                                | (1,857        | )       |              | $ | (17,577   | )          |            | $ | 151,752  |        
|Adjustments to net income: |                                                           |                                                                                                |                                                  |               |         |              |   |           |            |            |   |         
|                           | Bad debt expense                                          |                                                                                                |                                                  | 17,367        |         |              |   | 1,857     |            |            |   | 19,066   |        
|                           | Depreciation and amortization expense                     |                                                                                                |                                                  | 13,200        |         |              |   | 614       |            |            |   | 8,153    |        
|                           | Amortization of intangibles                               |                                                                                                |                                                  | 173,486       |         |              |   | 14,068    |            |            |   |         |        
|                           | Amortization of deferred financing costs                  |                                                                                                |                                                  | 19,835        |         |              |   | 1,123     |            |            |   | 46,219   |        
|                           | Stock option                                              |                                                                                                |                                                  | 443           |         |              |   |          |            |            |   |         |        
|                           | Loss on disposition of investment                         |                                                                                                |                                                  | 9             |         |              |   |          |            |            |   |         |        
|                           | Deferred tax benefit                                      |                                                                                                |                                                  | (1,225        | )       |              |   | (11,190   | )          |            |   | (1,570   | )      
|                           | Contributions from Qwest in lieu of income taxes          |                                                                                                |                                                  |              |         |              |   |          |            |            |   | 79,412   |        
|                           | Changes in operating assets and liabilities:              |                                                                                                |                                                  |               |         |              |   |           |            |            |   |          |        
|                           |                                                           | Accounts receivable                                                                            |                                                  |               | (26,974 | )            |   |           | 18,275     |            |   |          | 1,554   |         
|                           |                                                           | Deferred directory costs                                                                       |                                                  |               | (25,190 | )            |   |           | (17,606    | )          |   |          | 3,577   |         
|                           |                                                           | Other current assets                                                                           |                                                  |               | (1,203  | )            |   |           | (1,087     | )          |   |          | (11,075 | )       
|                           |                                                           | Other long-term assets                                                                         |                                                  |               | 1,161   |              |   |           | 2,947      |            |   |          |        |         
|                           |                                                           | Accounts payable and other liabilities                                                         |                                                  |               | 3,069   |              |   |           | 4,208      |            |   |          | 9,472   |         
|                           |                                                           | Accrued interest                                                                               |                                                  |               | (29,404 | )            |   |           | 14,428     |            |   |          | 6,680   |         
|                           |                                                           | Deferred revenue and customer deposits                                                         |                                                  |               | 61,638  |              |   |           | 46,284     |            |   |          | (20,835 | )       
|                           |                                                           | Amounts due to affiliates                                                                      |                                                  |               | (2,742  | )            |   |           | 5,166      |            |   |          |        |         
|                           |                                                           | Amounts due to affiliates related to
    post-retirement and other post-employment obligations |                                                  |               | 4,818   |              |   |           | 372        |            |   |          |        |         
|                           |                                                           | Employee benefit plan obligations and other
    long-term liabilities                          |                                                  |               | (197    | )            |   |           | (383       | )          |   |          | 6,362   |         
|                           |                                                           |                                                                                                |                                                  |               |         |              |   |           |            |            |   |         
|                           |                                                           |                                                                                                | Cash provided by operating activities            |               |         | 206,234      |   |           |            | 61,499     |   |          |         | 298,767  |  
|                           |                                                           |                                                                                                |                                                  |               |         |              |   |           |            |            |   |         
|Investing activities:      |                                                           |                                                                                                |                                                  |               |         |              |   |           |            |            |   |         
|                           |                                                           | Acquisition of Dex West                                                                        |                                                  |               | 5,185   |              |   |           | (4,290,104 | )          |   |          |        |         
|                           |                                                           | Payment of acquisition costs                                                                   |                                                  |               |        |              |   |           | (54,391    | )          |   |          |        |         
|                           |                                                           | Expenditures for property, plant and equipment                                                 |                                                  |               | (5,125  | )            |   |           | (1,533     | )          |   |          | (11,446 | )       
|                           |                                                           | Capitalized software development costs                                                         |                                                  |               | (20,551 | )            |   |           | (360       | )          |   |          | (4,404  | )       
|                           |                                                           |                                                                                                |                                                  |               |         |              |   |           |            |            |   |         
|                           |                                                           |                                                                                                | Cash used for investing activities               |               |         | (20,491      | ) |           |            | (4,346,388 | ) |          |         | (15,850  | )
|                           |                                                           |                                                                                                |                                                  |               |         |              |   |           |            |            |   |         
|Financing activities:      |                                                           |                                                                                                |                                                  |               |         |              |   |           |            |            |   |         
|                           | Proceeds from borrowings on revolving credit
    facility |                                                                                                |                                                  | 23,000        |         |              |   |          |            |            |   |         |        
|                           | Repayments of borrowings on revolving credit
    facility |                                                                                                |                                                  | (23,000       | )       |              |   |          |            |            |   |         |        
|                           | Proceeds from issuance of long-term debt                  |                                                                                                |                                                  |              |         |              |   | 3,378,000 |            |            |   |         |        
|                           | Repayments on long-term debt                              |                                                                                                |                                                  | (188,200      | )       |              |   | (80,000   | )          |            |   | (750,000 | )      
|                           | Payment of financing costs                                |                                                                                                |                                                  | (1,851        | )       |              |   | (108,737  | )          |            |   |         |        
|                           | Contribution from parent                                  |                                                                                                |                                                  | 20,052        |         |              |   | 1,122,000 |            |            |   |         |        
|                           | Distribution to parent                                    |                                                                                                |                                                  | (17,487       | )       |              |   |          |            |            |   |         |        
|                           | Payment of debt commitment fee                            |                                                                                                |                                                  |              |         |              |   | (17,981   | )          |            |   |         |        
|                           | Borrowings from affiliates                                |                                                                                                |                                                  |              |         |              |   |          |            |            |   | 768,187  |        
|                           | Dividends paid to Qwest                                   |                                                                                                |                                                  |              |         |              |   |          |            |            |   | (189,118 | )      
|                           |                                                           |                                                                                                |                                                  |               |         |              |   |           |            |            |   |         
|                           |                                                           |                                                                                                | Cash (used for) provided by financing activities |               |         | (187,486     | ) |           |            | 4,293,282  |   |          |         | (170,931 | )
|                           |                                                           |                                                                                                |                                                  |               |         |              |   |           |            |            |   |         
|Cash and cash equivalents: |                                                           |                                                                                                |                                                  |               |         |              |   |           |            |            |   |         
|                           | (Decrease) Increase                                       |                                                                                                |                                                  | (1,743        | )       |              |   | 8,393     |            |            |   | 111,986  |        
|                           | Beginning balance                                         |                                                                                                |                                                  | 4,658         |         |              |   |          |            |            |   | 161,338  |        
|                           |                                                           |                                                                                                |                                                  |               |         |              |   |           |            |            |   |         
|                           |                                                           |                                                                                                | Ending balance                                   |               | $       | 2,915        |   |           | $          | 8,393      |   |          | $       | 273,324  |  
|                           |                                                           |                                                                                                |                                                  |               |         |              |   |           |            |            |   |         

See accompanying notes to condensed consolidated
financial statements.

5



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##### Table of Contents



DEX MEDIA WEST LLC

AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF DEX
MEDIA, INC.





NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS


(Unaudited)




|    |                        
|--- | -----------------------
|(1) | Description of Business



|    |                                      
|--- | -------------------------------------
|(a) | Dex Media Initial Public
    Offering

On July 27, 2004, the Companys
indirect parent, Dex Media, Inc. (Dex Media)
consummated its initial public offering of common stock (the
Offering). Part of the proceeds related to the
Offering were used to redeem $18.2 million of the
Companys senior subordinated notes on August 26, 2004
at a redemption price of 109.875% along with the accrued and
unpaid interest. In connection with the Offering, the Company
paid $5.0 million to each of the Sponsors (as defined
below) to eliminate the $2.0 million annual advisory fee
payable under its management consulting agreements.



|    |            
|--- | -----------
|(b) | Acquisition

On August 19, 2002, Dex Holdings LLC
(Dex Holdings), the parent of Dex Media both new
entities formed by the private equity firms of The Carlyle Group
and Welsh, Carson, Anderson & Stowe (WCAS)
(together, the Sponsors), entered into concurrent
purchase agreements (the Dex East Purchase Agreement
and the Dex West Purchase Agreement) to purchase the
business of Qwest Dex Holdings, Inc. and its wholly-owned
subsidiary Qwest Dex, Inc. (together Qwest Dex) from
Qwest Communications International Inc. (Qwest) in
two separate phases.

In the first phase, consummated on
November 8, 2002, Dex Holdings assigned its right to
purchase the directory business in the Dex East States (as
defined below) to Dex Media East LLC (Dex Media
East), an indirect wholly-owned subsidiary of Dex Media.
Dex Media East now operates the directory business in Colorado,
Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South
Dakota (the Dex East States). The total amount of
consideration paid for Qwest Dexs directory business in
the Dex East States was $2.8 billion (excluding fees and
acquisition costs).

In the second phase (the
Acquisition), consummated on September 9, 2003,
Qwest Dex contributed its remaining assets and liabilities
relating to its directory business in the Dex West States (as
defined below) to GPP LLC, a newly-formed limited liability
company. Immediately following this contribution, Dex Media West
LLC, (Dex Media West or the Company), an
indirect wholly-owned subsidiary of Dex Media, purchased all of
the interests in GPP LLC for $4.3 billion (excluding fees
and acquisition costs). Immediately following such purchase, Dex
Media West merged with GPP LLC. Dex Media West now operates the
directory business acquired in Arizona, Idaho, Montana, Oregon,
Utah, Washington and Wyoming (the Dex West States).
In conjunction with the acquisition, Dex West (as defined below)
employees became employees of Dex Media West and were
immediately transferred to Dex Media East. On January 1,
2004, all employees of Dex Media East were transferred to
another indirect wholly-owned subsidiary of Dex Media, Dex Media
Service LLC ( Service Co.).



|    |                     
|--- | --------------------
|(c) | Predecessor Business

The combined financial statements of the acquired
business in the Dex West States prior to the September 9,
2003 acquisition date, referred to as Dex West or
the Predecessor, represent a component of Qwest Dex
and include the operating activities of Qwest Dex for the Dex
West States.



|    |           
|--- | ----------
|(d) | Operations

The Company is the exclusive official directory
publisher for Qwest Corporation, Qwests local exchange
carrier (Qwest LEC), in the Dex West States, which
is the primary local exchange carrier in most service areas
within the Dex West States. As a result, the Company is the
largest telephone directory publisher of white and yellow pages
directories to businesses and residents in the Dex West States.
The Company provides

6



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##### Table of Contents



DEX MEDIA WEST LLC


AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF DEX
MEDIA, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


directory and Internet solutions to local and
national advertisers. Virtually all of the Companys
revenue is derived from the sale of advertising in its various
directories. Published directories are distributed to businesses
and residents in the Dex West States through third-party vendors.



|    |                      
|--- | ---------------------
|(2) | Basis of Presentation



|    |            
|--- | -----------
|(a) | The Company

The accompanying condensed consolidated interim
financial statements are unaudited. In compliance with the
instructions of the Securities and Exchange Commission (the
SEC) for interim financial statements, certain
information and footnote disclosures normally included in
financial statements prepared in accordance with accounting
principles generally accepted in the United States of America
have been omitted. In managements opinion, the condensed
consolidated financial statements reflect all adjustments (which
consist of normal recurring adjustments) necessary to fairly
present the condensed consolidated statements of financial
position as of September 30, 2004 and December 31,
2003, the condensed consolidated statements of operations for
the three months and nine months ended September 30, 2004,
for the periods from September 10 to September 30,
2003, from July 1 to September 9, 2003 and the period
from January 1 to September 9, 2003 and the condensed
consolidated statements of cash flows for the nine months ended
September 30, 2004 and for the periods from
September 10 to September 30, 2003 and from January 1
to September 9, 2003. These condensed consolidated
financial statements should be read in conjunction with the
audited consolidated financial statements of the Company and the
Predecessor as of December 31, 2003 and 2002 and for the
periods from September 10 to December 31, 2003 and
from January 1 to September 9, 2003, and for the years
ended December 31, 2002 and 2001 included in the
Companys Form S-4 Amendment No. 2 as filed with
the SEC. The condensed consolidated statements of operations for
the three months and nine months ended September 30, 2004
are not necessarily indicative of the results expected for the
full year.

The accompanying condensed consolidated
statements of financial position of the Company as of
September 30, 2004 and December 30, 2003, the
condensed consolidated statements of operations for the three
months and nine months ended September 30, 2004 and the
period from September 10 to September 30, 2003, and
the condensed consolidated statements of cash flows for the nine
months ended September 30, 2004 and the period from
September 10 to September 30, 2003, include all
material adjustments required under purchase accounting.

Dex West is considered the Predecessor to the
Company. As such, the historical financial statements of Dex
West are included in the accompanying condensed consolidated
financial statements, including the statements of operations for
the periods from July 1 to September 9, 2003 and from
January 1 to September 9, 2003, and the combined statement
of cash flows for the period from January 1 to September 9,
2003 (together, the Predecessor Financial
Statements). The Predecessor Financial Statements have not
been adjusted to give effect to the Acquisition. As such, the
condensed consolidated financial statements of the Company after
the Acquisition are not comparable to the Predecessor Financial
Statements prior to the Acquisition.



|    |                
|--- | ---------------
|(b) | The Predecessor

The accompanying combined financial statements of
the Predecessor include the activities of Qwest Dex for business
conducted in the Dex West States. Because of Dex Wests
relationship with Qwest Dex as well as Qwest and its other
affiliates, the revenue and expenses are not necessarily
indicative of what they would have been had Dex West operated
without the shared resources of Qwest and its affiliates.
Accordingly, these combined financial statements are not
necessarily indicative of future results of operations.

7



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##### Table of Contents



DEX MEDIA WEST LLC


AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF DEX
MEDIA, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                  
|--- | -----------------
|(c) | Reclassifications

Certain prior period amounts have been
reclassified to conform to the 2004 presentation.



|    |                                               
|--- | ----------------------------------------------
|(3) | Summary of Significant Accounting
    Policies



|    |                            
|--- | ---------------------------
|(a) | Principles of Consolidation

The condensed consolidated financial statements
include the financial statements of Dex Media West and its
wholly-owned subsidiary. All intercompany balances and
transactions have been eliminated in consolidation.



|    |                 
|--- | ----------------
|(b) | Use of Estimates

The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States of America requires management to make estimates
and assumptions that affect the amounts and disclosures reported
in these consolidated financial statements and accompanying
notes. Actual results could differ significantly from those
estimates.



|    |                    
|--- | -------------------
|(c) | Revenue Recognition

The sale of advertising in printed directories
published by the Company and the Predecessor is the primary
source of revenue. Revenue is recognized ratably over the life
of each directory using the deferral and amortization method of
accounting, with revenue recognition commencing in the month of
delivery. The Company and the Predecessor publish white and
yellow pages directories primarily with 12-month lives. From
time to time, the Company may choose to change the publication
of certain directories in order to more efficiently manage work
and account flow. The lives of the effected directories will
primarily be 12 months thereafter. Such extensions did not
have a significant impact on the Companys results of
operations for the three months and nine months ended
September 30, 2004 and they are not expected to have a
material effect on revenue or cost of revenue in future periods
under the deferral and amortization method of accounting. The
Company published 27 and 96 directories for the three
months and nine months ended September 30, 2004,
respectively.

The Company enters into transactions where the
Companys products and services are promoted by a third
party and, in exchange, the Company carries the partys
advertisement. The Company accounts for these transactions in
accordance with Emerging Issues Task Force (EITF)
Issue No. 99-17, Accounting for Advertising Barter
Transactions.Revenue and expense related to such
transactions are classified in the consolidated statements of
operations consistently with similar items sold or purchased for
cash. Such barter transactions were not significant to the
Companys operations for the three months and nine months
ended September 30, 2004 and the period from
September 10 to September 30, 2003.

In certain cases, the Company enters into
agreements with accounts that involve the delivery of more than
one product or service. Revenue for such arrangements is
allocated in accordance with EITF Issue No. 00-21,
Revenue Arrangements with Multiple
Deliverables.



|    |                
|--- | ---------------
|(d) | Cost of Revenue

The Company and the Predecessor account for cost
of revenue under the deferral and amortization method of
accounting. Accordingly, the cost of revenue recognized in a
reporting period consists of (1) costs incurred in that
period and recognized in that period, principally sales salaries
and wages, (2) costs incurred in a prior period, a portion
of which is amortized and recognized in the current period and,
(3) costs incurred in the current period, a portion of
which is amortized and recognized in that period and the balance
of which is

8



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##### Table of Contents



DEX MEDIA WEST LLC


AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF DEX
MEDIA, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


deferred until future periods. Consequently,
there will be a difference between the cost of revenue
recognized in any given period and the costs incurred in the
given period, which may be significant.

Costs incurred in the current period and subject
to deferral include direct costs associated with the publication
of directories, including sales commissions, paper, printing,
transportation, distribution and pre-press production and
employee and systems support costs relating to each of the
foregoing. Sales commissions include commissions paid to
employees for sales to local advertisers and to third party
certified marketing representatives, which act as the
Companys channel to national advertisers. All deferred
costs related to the sale and production of directories are
recognized ratably over the life of each directory under the
deferral and amortization method of accounting, with cost
recognition commencing in the month of delivery.



|    |                         
|--- | ------------------------
|(e) | Stock-Based Compensation

Company.The Company
accounts for the Stock Option Plan of Dex Media, Inc. and the
Dex Media, Inc. 2004 Incentive Award Plan under the recognition
and measurement principles of Accounting Principles Board
(APB) Opinion No. 25, Accounting for
Stock Issued to Employees,and related
Interpretations. Had the Company accounted for employee stock
option grants under the fair value method prescribed by
Statement of Financial Accounting Standards (SFAS)
No. 123, Accounting for Stock-Based
Compensation,the pro forma results of the Company for
the three months and nine months ended September 30, 2004
and the period from September 10 to September 30, 2003
would have been as follows (in thousands):

|          |             |                    |   |                    |   |                    |   |        |   |  |   |         |  
|--------- | ----------- | ------------------ | - | ------------------ | - | ------------------ | - | ------ | - |  | - | ------- | -
|          |             | Three Months       |   | Nine Months        |   | Period from       
|          |             | Ended              |   | Ended              |   | September 10 to   
|          |             | September 30, 2004 |   | September 30, 2004 |   | September 30, 2003
|          |             |                    |   |                    |   |                   
|Net Loss: |             |                    |   |                    |   |                    |   |        |   |  |   |        
|          | As reported |                    | $ | (4,843             | ) |                    | $ | (1,857 | ) |  | $ | (17,577 | )
|          | Pro forma   |                    |   | (4,912             | ) |                    |   | (2,052 | ) |  |   | (17,594 | )

Predecessor.Had the
Predecessor accounted for Qwest employee stock option grants
under the fair value method prescribed by
SFAS No. 123, the pro forma net income of Dex West for
the periods from July 1 to September 9, 2003 and from
January 1 to September 9, 2003 would have been as follows
(in thousands):

|            |             |                   |   |                   |  |  |   |         | 
|----------- | ----------- | ----------------- | - | ----------------- |  |  | - | ------- | 
|            |             | Period from       |   | Period from      
|            |             | July 1 to         |   | January 1 to     
|            |             | September 9, 2003 |   | September 9, 2003
|            |             |                   |   |                  
|Net Income: |             |                   |   |                   |  |  |   |        
|            | As reported |                   | $ | 28,607            |  |  | $ | 151,752 | 
|            | Pro forma   |                   |   | 28,340            |  |  |   | 150,865 | 



|    |                     
|--- | --------------------
|(f) | Income Tax Provision

Income taxes are accounted for under the asset
and liability method. Deferred tax assets and liabilities are
recorded to reflect the future tax consequences of temporary
differences between the financial reporting bases of assets and
liabilities and their tax bases at each year end. Deferred tax
assets and liabilities are measured using the enacted income tax
rates in effect for the year in which those temporary
differences are expected to be recovered or settled. Deferred
tax assets and liabilities are adjusted for future income tax
rate changes in the year the changes are enacted. Deferred tax
assets are recognized for operating losses and tax credit carry
forwards if management believes, based upon existing evidence,
that it is more likely than not that the carry forward will be
utilized. All deferred tax assets are reviewed for realizability
and valuation allowances are recorded if it is more likely than
not that the deferred tax assets will not be realized.

9



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##### Table of Contents



DEX MEDIA WEST LLC


AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF DEX
MEDIA, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                               
|--- | ------------------------------
|(4) | Goodwill and Intangible Assets

During the nine months ended September 30,
2004, goodwill was decreased by the following purchase
accounting adjustment (in thousands):

|                              |  |   |           |  
|----------------------------- |  | - | --------- | -
|Balance at December 31, 2003  |  | $ | 2,198,586 |  
|Working capital adjustment    |  |   | (5,185    | )
|                              |  |   |           |  
|Balance at September 30, 2004 |  | $ | 2,193,401 |  
|                              |  |   |           |  

The initial purchase price and fair value
estimates recorded upon the September 9, 2003 Acquisition
were adjusted upon settlement of the working capital adjustment
with the seller in 2004 pursuant to the provisions of the Dex
West Purchase Agreement.

The gross carrying amount and accumulated
amortization of other intangible assets and their estimated
useful lives are as follows (dollars in thousands):

As of September 30, 2004

|                                  |        |          |         |              |  |          |          |          |   |   |         |           |  |  |            |     | 
|--------------------------------- | ------ | -------- | ------- | ------------ |  | -------- | -------- | -------- | - | - | ------- | --------- |  |  | ---------- | --- | 
|                                  |        | Gross    |         |              |  |          |          |         
|                                  |        | Carrying |         | Accumulated  |  | Net Book |          |         
|Intangible Assets                 |        | Value    |         | Amortization |  | Value    |          | Life    
|                                  |        |          |         |              |  |          |          |         
|Account relationships  local     |        | $        | 890,000 |              |  | $        | (184,489 | )        |   | $ | 705,511 |           |  |  | 20  years  | (1)
|Account relationships  national  |        |          | 252,000 |              |  |          | (36,582  | )        |   |   | 215,418 |           |  |  | 25  years  | (1)
|Non-compete/publishing agreements |        |          | 359,000 |              |  |          | (9,729   | )        |   |   | 349,271 |           |  |  | 39 years   |    
|Dex Trademark                     |        |          | 385,000 |              |  |          |         |          |   |   | 385,000 |           |  |  | Indefinite |    
|Qwest Dex Trademark agreement     |        |          | 65,000  |              |  |          | (16,441  | )        |   |   | 48,559  |           |  |  | 4 years    |    
|Advertising agreements            |        |          | 26,000  |              |  |          | (1,945   | )        |   |   | 24,055  |           |  |  | 14 years   |    
|                                  |        |          |         |              |  |          |          |          |   |   |         |           |  |  |            |    
|                                  | Totals |          | $       | 1,977,000    |  |          | $        | (249,186 | ) |   | $       | 1,727,814 |  |  |            |     | 
|                                  |        |          |         |              |  |          |          |          |   |   |         |           |  |  |            |    

As of December 31, 2003

|                                  |        |          |         |              |  |          |         |         |   |   |         |           |  |  |            |     | 
|--------------------------------- | ------ | -------- | ------- | ------------ |  | -------- | ------- | ------- | - | - | ------- | --------- |  |  | ---------- | --- | 
|                                  |        | Gross    |         |              |  |          |         |        
|                                  |        | Carrying |         | Accumulated  |  | Net Book |         |        
|Intangible Assets                 |        | Value    |         | Amortization |  | Value    |         | Life   
|                                  |        |          |         |              |  |          |         |        
|Account relationships  local     |        | $        | 890,000 |              |  | $        | (56,411 | )       |   | $ | 833,589 |           |  |  | 20  years  | (1)
|Account relationships  national  |        |          | 252,000 |              |  |          | (11,023 | )       |   |   | 240,977 |           |  |  | 25  years  | (1)
|Non-compete/publishing agreements |        |          | 359,000 |              |  |          | (2,860  | )       |   |   | 356,140 |           |  |  | 39 years   |    
|Dex Trademark                     |        |          | 385,000 |              |  |          |        |         |   |   | 385,000 |           |  |  | Indefinite |    
|Qwest Dex Trademark agreement     |        |          | 65,000  |              |  |          | (4,834  | )       |   |   | 60,166  |           |  |  | 4 years    |    
|Advertising agreements            |        |          | 26,000  |              |  |          | (572    | )       |   |   | 25,428  |           |  |  | 14 years   |    
|                                  |        |          |         |              |  |          |         |         |   |   |         |           |  |  |            |    
|                                  | Totals |          | $       | 1,977,000    |  |          | $       | (75,700 | ) |   | $       | 1,901,300 |  |  |            |     | 
|                                  |        |          |         |              |  |          |         |         |   |   |         |           |  |  |            |    



---



|    |                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------
|(1) | Amortization is calculated using a declining
    method in relation to estimated retention lives of acquired
    accounts.

10



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##### Table of Contents



DEX MEDIA WEST LLC


AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF DEX
MEDIA, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |               
|--- | --------------
|(5) | Long-Term Debt

Long-term debt is comprised of the following (in
thousands, in descending order of right of payment):

|                                                                                                                                                                                                                                   |  |               |           |              |  |   |           |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | --------- | ------------ |  | - | --------- | -
|                                                                                                                                                                                                                                   |  | September 30, |           | December 31,
|                                                                                                                                                                                                                                   |  | 2004          |           | 2003        
|                                                                                                                                                                                                                                   |  |               |           |             
|Notes payable to banks, Tranche A term loan,
    bearing interest at adjusted London Interbank Offer Rates
    (LIBOR) plus the current applicable interest spread
    of 2.0% (weighted average of 3.74% at September 30, 2004) |  | $             | 830,222   |              |  | $ | 905,778   |  
|Notes payable to banks, Tranche B term loan,
    bearing interest at adjusted LIBOR plus the current applicable
    interest spread of 2.25% (weighted average of 3.96% at
    September 30, 2004)                                 |  |               | 1,037,778 |              |  |   | 1,132,222 |  
|Unsecured senior notes, due August 2010, bearing
    interest at 8.5%                                                                                                                                                              |  |               | 385,000   |              |  |   | 385,000   |  
|Unsecured senior subordinated notes, due August
    2013, bearing interest at 9.875%                                                                                                                                               |  |               | 761,800   |              |  |   | 780,000   |  
|                                                                                                                                                                                                                                   |  |               |           |              |  |   |           |  
|                                                                                                                                                                                                                                   |  |               | 3,014,800 |              |  |   | 3,203,000 |  
|Less: current portion of long-term debt                                                                                                                                                                                            |  |               | (77,243   | )            |  |   | (20,178   | )
|                                                                                                                                                                                                                                   |  |               |           |              |  |   |           |  
|                                                                                                                                                                                                                                   |  | $             | 2,937,557 |              |  | $ | 3,182,822 |  
|                                                                                                                                                                                                                                   |  |               |           |              |  |   |           |  

A portion of the net proceeds from the Offering
was used to redeem $18.2 million of the Companys
senior subordinated notes at a redemption price of 109.875% plus
accrued and unpaid interest on August 26, 2004.

As of September 30, 2004, there were no
borrowings under the revolving credit facility. The Company paid
interest and fees on the bank facility, senior notes and senior
subordinated notes of $170.1 million and $0.9 million
during the nine months ended September 30, 2004 and the
period from September 10 to September 30, 2003,
respectively. Included in interest and fees paid in 2004 were
$1.8 million of early redemption premiums paid to redeem a
portion of our senior subordinated notes and the accelerated
payment of less than $0.1 million accrued interest on those
notes. The premium and interest were paid with a portion of the
net proceeds from the Offering. As of September 30, 2004,
the Company was in compliance with all debt covenants under its
credit facilities.

In connection with the amendment and restatement
of our Credit Agreement, the applicable margins on the revolving
credit facility, Tranche A term loan and Tranche B
term loan have been reduced. The commitment fee on the unused
portion of the revolving credit facility has been reduced to
0.375% from 0.5%. The reductions have been effective since
June 11, 2004.

As discussed in Note 1(a), a portion of the
net proceeds from the Offering was used to redeem
$18.2 million of the Companys senior subordinated
notes at a redemption price of 109.875% plus accrued and unpaid
interest.



|    |                      
|--- | ---------------------
|(6) | Short-term Borrowings

In September 2002, Qwest Dex, Inc. issued to the
Predecessor $750.0 million in debt with a two-year
maturity. The loan consisted of a fixed interest rate component,
at a rate of 14% per annum, and a floating interest rate
component, at LIBOR plus 11.50%. The loan was guaranteed by
Qwest Dex Holdings, Inc. and Qwest Services Corporation
(QSC), and the obligations were secured by a first
priority pledge of the stock of Qwest Dex, a first priority
pledge of substantially all of the assets of Qwest Dex and a
second priority pledge of the stock of Qwest LEC, a wholly owned
subsidiary of Qwest. The loan agreement included certain
financial covenants, including an interest coverage ratio based
on earnings before interest, taxes, depreciation

11



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##### Table of Contents



DEX MEDIA WEST LLC


AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF DEX
MEDIA, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


and amortization (EBITDA) to interest
expense with a minimum ratio of 4.75:1 and a debt to EBITDA
ratio of 1.75:1 and other covenants limiting Dexs ability
to incur additional debt or liens, pay dividends and make
investments. Upon the completion of the sale of Dex West, the
entire $750.0 million debt balance was repaid. The
Predecessor paid interest of $67.4 million for the period
from January 1 to September 9, 2003.

In addition, Qwest granted a second priority
pledge of the stock of Qwest Dex Holdings, Inc. and Qwest Dex,
Inc. and certain assets of Qwest Dex, Inc. to its banks in
connection with an amendment of its credit facility. Qwest Dex,
Inc. and Qwest Dex Holdings, Inc. were guarantors of the credit
facility. The amount of the guarantee was limited to the maximum
amount outstanding under the loan. The credit facility, as
amended, included several restrictive covenants which, among
other things, limited Qwests ability to incur additional
debt or liens; pay dividends; repurchase Qwests common
stock; sell, lease, transfer or dispose of assets; make
investments; and merge with another company.



|    |                   
|--- | ------------------
|(7) | Stock Based Awards

On November 8, 2002, Dex Media adopted the
Stock Option Plan of Dex Media, Inc. (the 2002 Plan)
that permits the grant of nonqualified and incentive stock
options to its employees, consultants and independent directors
or those of its wholly-owned subsidiaries. Effective May 2004,
Dex Media adopted the Dex Media, Inc. 2004 Incentive Award Plan
(the 2004 Plan). The 2004 Plan provides for a
variety of stock-based awards, including non-qualified stock
options, incentive stock options, stock appreciation rights,
restricted stock awards, restricted stock unit awards, deferred
stock awards, dividend equivalents, performance-based awards and
other stock-based awards. Effective with the adoption of the
2004 Plan, Dex Media discontinued grants under the 2002 Plan
while the 5,066,540 options outstanding under the 2002 Plan
remain outstanding pursuant to the terms of that plan. Upon
adoption of the 2004 Plan, 210,110 shares available for
issuance under the 2002 Plan became available for issuance under
the 2004 Plan. As of September 30, 2004, the number of
shares available for issuance under the 2004 Plan was 1,210,110
with 12,500 shares issued under a restricted stock award
and 1,197,610 shares available for issuance pursuant to
future awards.

The Compensation Committee of Dex Media
determines the terms for each award. Generally, all outstanding
stock options have an exercise price that is equal to the
estimated fair value of the common stock on the date the stock
option was granted, however, in certain instances stock options
have been granted with an exercise price below the estimated
fair value of the common stock on the date of grant. All
outstanding options have a term of ten years. Outstanding
options vest in two segments. Subject to the optionees
continued employment with the Company, (1) 25% of the
options granted will vest in equal annual installments of 5%
each on each December 31 beginning in the year of grant or
the following year, depending upon when during the calendar year
the options are granted, and ending five years after; and
(2) 75% of the options granted will vest on the eighth
anniversary of the grant date; however, an installment equal to
15% of the options granted shall become vested following each of
the fiscal years beginning the year of grant or the following
year, depending upon when during the calendar year the options
are granted, and ending five years after if certain EBITDA
targets are met with respect to each year. All shares issued
under the restricted stock awards are subject to restriction on
sale and transfer of the shares. These restrictions lapse on
one-third of the shares granted on each of the first three
anniversary dates of the grant, provided that the recipient is
still an employee or director of the Company.

On November 3, 2003, Dex Media declared a
distribution to Dex Holdings of $750.2 million. As a result
of the distribution and as provided under the 2002 Plan, Dex
Media adjusted the exercise price of all outstanding options to
$6.00, effective November 10, 2003. On January 28,
2004, Dex Media declared another distribution to its parent of
$250.5 million. As a result of the distribution and as
allowed under the 2002 Plan, Dex Media adjusted the exercise
price of outstanding options to $4.64 and increased the number
of outstanding options by 9.3587%, effective March 3, 2004.
As the aggregate intrinsic value of the awards immediately after
the changes in exercise price was not greater than the aggregate
intrinsic value of the awards

12



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##### Table of Contents



DEX MEDIA WEST LLC


AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF DEX
MEDIA, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


immediately prior to the changes in exercise
price, and as the ratio of the exercise price per share to the
market price per share was not reduced, the adjustments to the
exercise price of the options did not result in any accounting
recognition in the Companys consolidated statements of
operations in accordance with APB Opinion No. 25 and FASB
Interpretation No. (FIN) 44,
Accounting for Certain Transactions Involving Stock
Compensation.

Predecessor.Employees of the Predecessor participated in the Qwest employee
stock incentive plans. The Qwest stock incentive plans were
accounted for using the intrinsic value method of APB Opinion
No. 25 under which no compensation expense is recognized
for options granted to employees when the strike price of those
options equals or exceeds the value of the underlying security
on the measurement date. Generally, options granted to current
Dex Media West employees under this plan expired 90 days
after the Acquisition.



|    |                                               
|--- | ----------------------------------------------
|(8) | Pension and Other Post-Retirement
    Benefits



|    |                    
|--- | -------------------
|(a) | General Description

Company.Effective
November 8, 2002, Dex Media adopted a pension plan and
effective December 1, 2002, Dex Media adopted a
post-retirement benefit plan providing retiree healthcare
(together, the Dex Media Plans) with features
similar to the Qwest plans described below. All individuals who
became employees of Dex Media in connection with the Acquisition
and who previously participated in the Qwest plans now
participate in the Dex Media Plans. Employees of Qwest Dex who
retired prior to the date of the Acquisition became retirees of
Qwest and as such receive benefits under the Qwest plans. Dex
Media has filed for a determination letter with the IRS for its
pension plan.

Pension costs and other post-retirement costs are
recognized over the periods in which the employee renders
services and becomes eligible to receive benefits as determined
by using the projected unit credit method. Dex Medias
funding policy is to make contributions with the objective of
accumulating sufficient assets to pay all benefits when due. No
pension funding was required for Dex Media for the three months
and nine months ended September 30, 2004 and the period
from September 10 to September 30, 2003. The
post-retirement benefit plan is pay-as-you go and is funded out
of Dex Medias operating cash as the costs are incurred. No
other post-retirement benefit funding was required for Dex Media
for the three months and nine months ended September 30,
2004 and the period from September 10 to September 30,
2003.

On September 9, 2003, Dex West employees
became employees of Dex Media East. Effective January 1,
2004, all employees of Dex Media East were transferred to
Service Co. As such, all employee-related liabilities, including
pension and other post-retirement obligations, are now included
in Service Co.s liabilities. The Company records an
affiliate payable for the portion of the liability associated
with the employees who provide services to Dex Media West. Under
the Shared Services and Employees Agreement dated
September 9, 2003, costs related to employees providing
services entirely for Dex Media West are allocated 100% to Dex
Media West. Shared employee costs are allocated and charged to
Dex Media West based upon Dex Media Wests proportional
share of consolidated Dex Media revenue.

Predecessor.Qwest
Dex employees participated in the Qwest pension, other
post-retirement and other post-employment benefit plans. The
amounts contributed by Qwest Dex to these plans were not
segregated or restricted to pay amounts due to Qwest Dex
employees and could be used to provide benefits to other
employees of Qwest or its affiliates. The cost of pension and
post-retirement health care and life insurance benefits and
required contributions were apportioned to Qwest Dex based upon
demographic information provided by the plan administrator.

The noncontributory defined benefit pension plan
included substantially all management and occupational
(union) employees. Post-retirement healthcare and life
insurance plans provided medical, dental, and

13



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##### Table of Contents



DEX MEDIA WEST LLC


AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF DEX
MEDIA, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


life insurance benefits for certain retirees.
Qwest also provided post-employment benefits to certain former
employees.

Pension credits and other post-retirement costs
are recognized over the period in which the employee renders
services and becomes eligible to receive benefits as determined
by using the projected unit credit method. Qwests funding
policy was to make contributions with the objective of
accumulating sufficient assets to pay all benefits when due. No
pension funding was required for Qwest or Qwest Dex for the
periods from July 1 to September 9, 2003 or from
January 1 to September 9, 2003 and neither Qwest nor
Qwest Dex made any contributions to the other
post-retirement benefit plan for the periods from July 1 to
September 9, 2003 and from January 1 to
September 9, 2003.



|    |                                            
|--- | -------------------------------------------
|(b) | Components of Net Periodic Benefit
    Cost

The components of net periodic benefit cost for
the Company and the Predecessor are as follows (in thousands):

|                                   |  |                    |        |                          |  |                       |     |                 |  |         |      |                 |  |   |     |  |  |   |        |   |  |   |       |  
|---------------------------------- |  | ------------------ | ------ | ------------------------ |  | --------------------- | --- | --------------- |  | ------- | ---- | --------------- |  | - | --- |  |  | - | ------ | - |  | - | ----- | -
|                                   |  |                    |        |                          |  |                      
|                                   |  | Company            |        | Company                  |  | Predecessor          
|                                   |  |                    |        |                          |  |                      
|                                   |  |                    |        |                          |  |                      
|                                   |  | Three Months Ended |        | Period from September 10 |  | Period from July 1 to
|                                   |  | September 30, 2004 |        | to September 30, 2003    |  | September 9, 2003    
|                                   |  |                    |        |                          |  |                      
|                                   |  | Pension            |        | Post-Retirement          |  | Pension               |     | Post-Retirement |  | Pension |      | Post-Retirement
|                                   |  | Benefit            |        | Benefits                 |  | Benefit               |     | Benefits        |  | Benefit |      | Benefits       
|                                   |  |                    |        |                          |  |                       |     |                 |  |         |      |                
|Service cost                       |  | $                  | 1,471  |                          |  | $                     | 343 |                 |  | $       | 264  |                 |  | $ | 52  |  |  | $ | 585    |   |  | $ | 73    |  
|Interest cost                      |  |                    | 1,713  |                          |  |                       | 414 |                 |  |         | 338  |                 |  |   | 90  |  |  |   | 2,060  |   |  |   | 1,328 |  
|Expected return on plan assets     |  |                    | (2,184 | )                        |  |                       |    |                 |  |         | (391 | )               |  |   |    |  |  |   | (2,943 | ) |  |   | (463  | )
|Amortization of prior service cost |  |                    |       |                          |  |                       | (57 | )               |  |         |     |                 |  |   |    |  |  |   |       |   |  |   | (61   | )
|Amortization of transition asset   |  |                    |       |                          |  |                       |    |                 |  |         |     |                 |  |   |    |  |  |   | (244   | ) |  |   |      |  
|Amortization of net loss           |  |                    |       |                          |  |                       |    |                 |  |         |     |                 |  |   |    |  |  |   |       |   |  |   | 341   |  
|                                   |  |                    |        |                          |  |                       |     |                 |  |         |      |                 |  |   |     |  |  |   |        |   |  |   |       |  
|Net periodic benefit cost          |  | $                  | 1,000  |                          |  | $                     | 700 |                 |  | $       | 211  |                 |  | $ | 142 |  |  | $ | (542   | ) |  | $ | 1,218 |  
|                                   |  |                    |        |                          |  |                       |     |                 |  |         |      |                 |  |   |     |  |  |   |        |   |  |   |       |  

|                                   |  |                    |        |                          |  |                          |       |                 |  |         |      |                 |  |   |     |  |  |   |         |   |  |   |        |  
|---------------------------------- |  | ------------------ | ------ | ------------------------ |  | ------------------------ | ----- | --------------- |  | ------- | ---- | --------------- |  | - | --- |  |  | - | ------- | - |  | - | ------ | -
|                                   |  |                    |        |                          |  |                         
|                                   |  | Company            |        | Company                  |  | Predecessor             
|                                   |  |                    |        |                          |  |                         
|                                   |  |                    |        |                          |  |                         
|                                   |  | Nine Months Ended  |        | Period from September 10 |  | Period from January 1 to
|                                   |  | September 30, 2004 |        | to September 30, 2003    |  | September 9, 2003       
|                                   |  |                    |        |                          |  |                         
|                                   |  | Pension            |        | Post-Retirement          |  | Pension                  |       | Post-Retirement |  | Pension |      | Post-Retirement
|                                   |  | Benefit            |        | Benefits                 |  | Benefit                  |       | Benefits        |  | Benefit |      | Benefits       
|                                   |  |                    |        |                          |  |                          |       |                 |  |         |      |                
|Service cost                       |  | $                  | 4,413  |                          |  | $                        | 1,029 |                 |  | $       | 264  |                 |  | $ | 52  |  |  | $ | 2,111   |   |  | $ | 253    |  
|Interest cost                      |  |                    | 5,139  |                          |  |                          | 1,242 |                 |  |         | 338  |                 |  |   | 90  |  |  |   | 7,434   |   |  |   | 4,612  |  
|Expected return on plan assets     |  |                    | (6,552 | )                        |  |                          |      |                 |  |         | (391 | )               |  |   |    |  |  |   | (10,621 | ) |  |   | (1,607 | )
|Amortization of prior service cost |  |                    |       |                          |  |                          | (171  | )               |  |         |     |                 |  |   |    |  |  |   |        |   |  |   | (211   | )
|Amortization of transition asset   |  |                    |       |                          |  |                          |      |                 |  |         |     |                 |  |   |    |  |  |   | (880    | ) |  |   |       |  
|Amortization of net loss           |  |                    |       |                          |  |                          |      |                 |  |         |     |                 |  |   |    |  |  |   |        |   |  |   | 1,183  |  
|                                   |  |                    |        |                          |  |                          |       |                 |  |         |      |                 |  |   |     |  |  |   |         |   |  |   |        |  
|Net periodic benefit cost          |  | $                  | 3,000  |                          |  | $                        | 2,100 |                 |  | $       | 211  |                 |  | $ | 142 |  |  | $ | (1,956  | ) |  | $ | 4,230  |  
|                                   |  |                    |        |                          |  |                          |       |                 |  |         |      |                 |  |   |     |  |  |   |         |   |  |   |        |  

14



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##### Table of Contents



DEX MEDIA WEST LLC


AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF DEX
MEDIA, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                              
|--- | -----------------------------
|(9) | Commitments and Contingencies



|    |           
|--- | ----------
|(a) | Litigation

The Company is involved, from time to time, in
litigation arising in the normal course of business. The outcome
of this litigation is not expected to have a material adverse
impact on the Company.



|    |                             
|--- | ----------------------------
|(b) | Planned Work Force Reduction

In September of 2004, the Company announced a
planned work force reduction primarily due to efficiencies
gained by the replacement of our core production platform with
technology from Amdocs. Accordingly, the Company accrued
$4.7 million of severance costs in the third quarter of
2004.



|     |                             
|---- | ----------------------------
|(10) | Transactions with Affiliates

As also described in Notes 1(b) and 8(a),
upon consummation of the acquisition of Dex West on
September 9, 2003, all Dex West employees transferred to
Dex Media West became legal employees of Dex Media East.
Effective January 1, 2004, all employees of Dex Media East
were transferred to Service Co. As such, all employee-related
liabilities, including pension and other post-retirement
obligations, are now included in Service Co.s liabilities,
with an offsetting asset recorded as an affiliate receivable.
Dex Media West is charged and carries an affiliate payable for
the portion of the liability associated with employees providing
services to Dex Media West. Pursuant to the Shared Services and
Employees Agreement dated September 9, 2003, costs related
to employees providing services entirely for Dex Media West are
allocated 100% to Dex Media West. Shared employee costs are
allocated and charged to Dex Media West based upon Dex Media
Wests proportional share of consolidated Dex Media
revenue. All cash related affiliate balances are settled at
least monthly.



|     |                                                      
|---- | -----------------------------------------------------
|(11) | Related Party Transactions, Other than
    Affiliates

In connection with the Acquisition, the Company
entered into a management consulting agreement with each of the
Sponsors. Each agreement allows the Company access to the
Sponsors expertise in areas such as corporate management,
financial transactions, product strategy, investment,
acquisitions and other matters that relate to the Companys
business, administration and policies. Each of the two Sponsors
received an annual advisory fee of $1.0 million for
advisory, consulting and other services. Pursuant to these
management consulting agreements, the Company incurred
$1.0 million and $0.1 million for the nine months
ended September 30, 2004 and the period from
September 10 to September 30, 2003, respectively. The
annual advisory fees payable under the agreements were
terminated in conjunction with Dex Medias Offering for a
one-time fee of $5.0 million paid to each of the two
Sponsors. The Sponsors maintain the right to act as the
Companys financial advisor or investment banker in
connection with any merger, acquisition, disposition, finance or
the like in return for additional reasonable compensation and
expenses as may be agreed upon by the parties.

Dex Media has entered into a two year network
services agreement with SAVVIS Communications Corporation
(SAVVIS), pursuant to which SAVVIS will provide
network connections and other services to support the
Companys integrated production system and other systems.
SAVVIS is an affiliate of WCAS. The Company and Dex Media East
expect to pay SAVVIS approximately $2.2 million,
collectively, over the two-year term of the contract, although
the Company has the option to purchase additional services for
which the Company would pay SAVVIS additional fees. As of
September 30, 2004, approximately $1.2 million was not
yet incurred under the contract.

15



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##### Table of Contents



DEX MEDIA WEST LLC


AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF DEX
MEDIA, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|     |                 
|---- | ----------------
|(12) | Subsequent Event



|    |                    
|--- | -------------------
|(a) | Interest Rate Swaps

In October 2004, the Company entered into four
fixed interest rate swaps to hedge against the effects of
increases in the interest rates associated with floating debt on
its credit facilities. The interest rate swaps have an aggregate
notional amount of $300 million, with applicable preset
monthly fixed rates ranging from 1.901% to 3.61%. The interest
rate swaps will expire in October 2006.



|    |              
|--- | -------------
|(b) | Bond Offering

On November 10, 2004, the Company announced
that it priced an offering of $300.0 million senior notes
due 2011, at a rate of 5 7/8%. The gross proceeds will be
primarily used to pay down a portion of the Companys bank
facilities.

16



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##### Table of Contents








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

Executive Overview



| |           
| | ----------
| | Background

The following discussion and analysis of our
financial condition and results of operations covers periods
prior to and subsequent to the acquisition of Dex West on
September 9, 2003 (the Acquisition). In this
section, references to Dex West or
Predecessor refer to the historical operations of
Qwest Dex Holdings, Inc. and its subsidiary in Arizona, Idaho,
Montana, Oregon, Utah, Washington and Wyoming (collectively the
Dex West States) prior to the Acquisition.
References to we, our or us
refers to Dex Media West, the successor to Dex West or to the
combined results of Dex Media West and Dex West where
applicable. We have operated as a stand-alone company since the
Acquisition. The Acquisition has been accounted for under the
purchase method of accounting. Under this method, the
pre-acquisition deferred revenue and related deferred costs
associated with directories that were published prior to the
acquisition date were not carried over to our balance sheet. The
effect of this accounting treatment is to reduce revenue and
related costs that would otherwise have been recognized during
the twelve months subsequent to the acquisition date. For
purposes of comparison and analysis of the three months ended
September 30, 2004 to the three months ended
September 30, 2003 the period from September 10, 2003
to September 30, 2003, has been combined with the
Predecessor period from July 1 to September 9, 2003;
and such combined period is hereinafter referred to as the
combined three month period. For purposes of
comparison and analysis of the nine months ended
September 30, 2004 to the nine months ended
September 30, 2003 the period from September 10, 2003
to September 30, 2003, has been combined with the
Predecessor period from January 1 to September 9, 2003; and
such combined period is hereinafter referred to as the
combined nine month period.

The discussion and analysis of historical
predecessor periods does not reflect the significant impact that
the Acquisition has had on us, including significantly increased
leverage and liquidity requirements. The statements in the
discussion and analysis regarding industry outlook, our
expectations regarding future performance of our business and
the other non-historical statements are forward-looking
statements. These forward-looking statements are subject to
numerous risks and uncertainties. Our actual results may differ
materially from those contained in any forward-looking
statements. See  Disclosure Regarding
Forward-Looking Statements. You should read the following
discussion together with our condensed consolidated financial
statements and related notes thereto included elsewhere herein.

Upon consummation of the Acquisition, Dex West
employees became employees of Dex Media East. Effective
January 1, 2004, all employees of Dex Media East were
transferred to another indirect wholly owned subsidiary of Dex
Media, Dex Media Service Co. (Service Co.).

As a result of our conversion to the Amdocs
software system (discussed below), certain of our customer
account categories will be reclassified, which may result in a
change in how we report our total number of customer accounts.



| |             
| | ------------
| | Our Business

We are the largest directory publisher in the Dex
West States. For each of the three months ended
September 30, 2004 and the combined three months ended
September 30, 2003, we published 27 directories,
respectively, and distributed approximately 6.3 million
copies of these directories to business and residential
consumers in the Dex West States. For the nine months ended
September 30, 2004 and the combined nine months ended
September 30, 2003, we published 96 and
88 directories, respectively, and distributed approximately
21.9 million and 19.8 million copies, respectively, of
these directories to business and residential consumers in the
Dex West States. We also provide related services, including an
Internet-based directory, direct marketing lists and the sale of
Dex directories and other publishers directories outside
of the normal delivery schedule. For the three months and nine
months ended September 30, 2004, we generated
$221.7 million and $646.0 million in revenue,
respectively. Excluding the effects of purchase accounting
adjustments to deferred revenue, our revenue for the three and
nine months ended September 30, 2004 would have been
$230.4 million and $692.8 million, respectively.
Approximately 97.9% of our total revenue,

17



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##### Table of Contents



excluding the effects of purchase accounting, for
each of the three months and nine months ended
September 30, 2004, respectively, was generated from the
publication of directories.


Stand-Alone Company

Our Predecessor historically operated as the
directory business of Qwest Dex in the Dex West States and not
as a stand-alone company. The combined financial statements
included for the periods from July 1 to September 9,
2003 and from January 1 to September 9, 2003 have been
derived from the historical financial statements of Qwest Dex
and include the activities of Qwest Dex for business conducted
in the Dex West States prior to the Acquisition. Because of the
Predecessors relationship with Qwest Dex as well as Qwest
and its other affiliates, the Predecessors historical
results of operations and cash flows are not necessarily
indicative of what they would have been had the Predecessor
operated without the shared resources of Qwest and its
affiliates. Accordingly, the combined statements for the
combined three months and combined nine months ended
September 30, 2003 are not indicative of our future results
of operations and cash flows.

Historically, the Predecessor reimbursed Qwest
for services it and its affiliates provided to Dex West based
upon either (1) tariffed or negotiated contract rates,
(2) market prices or (3) fully distributed costs
(FDC). FDCs include costs associated with employees
of Qwest or Qwest affiliates that are entirely dedicated to
functions within Dex West, many of whom became employees of Dex
Media East upon consummation of the Acquisition and subsequently
were transferred to Service Co. on January 1, 2004.
Such fully distributed employee costs were paid by Dex West
through shared payroll and benefit systems as incurred. Other
affiliate service costs were paid by Dex West based upon
presentation of periodic billings from Qwest or affiliates of
Qwest. The allocation methodologies are consistent with the
guidelines established for Qwest reporting to federal and state
regulatory bodies. The historical costs for services provided to
the Predecessor by Qwest affiliates may not necessarily reflect
the expenses that we will incur as an independent entity.

After the Acquisition, Qwest and Qwest LEC
continued to provide certain services to us that they had
historically provided to the Predecessor, including but not
limited to support services relating to information technology
services and payroll services, pursuant to a transition services
agreement. We terminated and replaced the transition services
agreement with Qwest and Qwest LEC as of December 31, 2003
with services provided internally or through arrangements with
third parties.

Our Strategy

Our strategy is centered on building
relationships with our major account groups: small and
medium-sized local businesses and national companies doing
business in the Dex West States. We plan to continue to build
our knowledge of their businesses and develop value-added
content that can be distributed to our business and residential
consumers in a variety of forms. Currently, the primary method
of distribution is our print directories. We also use the
Internet and CD-ROMs to deliver our content. We plan to continue
evaluating different methods of distribution as markets and
electronic device acceptance change, particularly in the digital
space. Additionally, we will look to enhance print product
offerings and Internet-related products and distribution.

Maximizing the utility of our content is an
important aspect of our overall strategy. To accomplish this, we
plan to continue: innovating new products such as advertising on
book spines, covers and tabs; expanding on market segmentation
such as bilingual directories in select markets; and enhancing
our distribution platforms. In addition, we plan to continue
evaluating our related businesses based on the utility of these
product offerings and Internet-related products and distribution.

Also, now that we are a stand-alone company, our
strategy is to focus on improving our infrastructure in order to
achieve a more efficient cost structure and improve revenue
opportunities in the long-term. Beginning in 2004, we began
replacing our entire production system with Amdocs technology in
a phased deployment. The first phase was deployed on
June 1, 2004, with the last phase expected to be completed
in the first quarter of 2005.

18



---



##### Table of Contents



Results of Operations



| |         
| | --------
| | Overview

Our condensed consolidated financial statements
included herein have been prepared on the basis of the deferral
and amortization method of accounting, under which revenue and
expenses are initially deferred and then recognized ratably over
the life of each directory, commencing in the month of delivery.
In 2003, we determined that the 12-month lives of eight
directories published in December 2002 would be extended. The
new editions of these eight directories were published, in most
cases, in January 2004. These extensions were made to more
efficiently manage work and account flow. The lives of the new
editions of these directories are expected to be 12 months,
thereafter. These extensions did not have a significant impact
on our results of operations for the three months and nine
months ended September 30, 2004 and are not expected to
have a material effect on revenue or cost of revenue in future
periods under the deferral and amortization method of accounting.



| |        
| | -------
| | Revenue

We derive virtually all of our revenue from the
sale of advertising in our printed directories, which we refer
to as directory services revenue. We also provide related
services, including an Internet-based directory, other
Internet-related products, direct marketing lists and the sale
of Dex directories and other publishers directories
outside of the normal delivery schedule, which we refer to
collectively as other revenue. Growth in directory services
revenue is affected by several factors, including changes in the
quantity and size of advertisements sold, as well as the
proportion of premium advertisements sold, changes in the
pricing of advertising, changes in the quantity and mix of
advertising purchased per account and the introduction of
additional products which generate incremental revenue.
Directory services revenue may also increase through the
publication of new printed directories.

Our revenue and cost of revenue for the twelve
months following the consummation of the Acquisition are lower
than they would have been had the Acquisition not occurred
because the Acquisition was accounted for under the purchase
method of accounting. Under the purchase method of accounting,
deferred revenue and deferred directory costs associated with
the directories published and distributed prior to the
Acquisition were not carried over to our balance sheet at the
time of purchase. The effect of this accounting treatment was to
reduce revenue and related costs that would otherwise have been
recognized in the twelve months subsequent to the Acquisition.
The purchase method of accounting will not affect our revenue
and directory costs in periods subsequent to September 2004.
This purchase accounting adjustment is non-recurring and has no
impact on cash flows.

We enter into transactions where our products and
services are promoted by a third party and, in exchange, we
carry that partys advertisement. We account for these
transactions in accordance with Emerging Issues Task Force
(EITF) Issue No. 99-17, Accounting for
Advertising Barter Transactions.Revenue and expense
related to such transactions are classified in the consolidated
statements of operations consistently with similar items sold or
purchased for cash. Such barter transactions were not
significant to our operations for the three months and nine
months ended September 30, 2004 and the period from
September 10 to September 30, 2003.

In certain cases, we enter into agreements with
accounts that involve the delivery of more than one product or
service. We allocate revenue for such arrangements in accordance
with EITF Issue No. 00-21, Revenue Arrangements
with Multiple Deliverables.



| |                
| | ---------------
| | Cost of Revenue

We account for cost of revenue under the deferral
and amortization method of accounting. Accordingly, our cost of
revenue recognized in a reporting period consists of
(1) costs incurred in that period and recognized in that
period, principally sales salaries and wages, (2) costs
incurred in a prior period, a portion of which is amortized and
recognized in the current period, and (3) costs incurred in
the current period, a portion of which is amortized and
recognized in that period and the balance of which is deferred
until future

19



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##### Table of Contents



periods. Consequently, there will be a difference
between the cost of revenue recognized in any given period and
the costs incurred in the given period, which may be significant.


Costs incurred in the current period and subject
to deferral include direct costs associated with the publication
of directories, including sales commissions, paper, printing,
transportation, distribution and pre-press production, and
employee and systems support costs relating to each of the
foregoing. Sales commissions include commissions paid to
employees for sales to local advertisers and to certified
marketing representatives (CMRs), which act as our
channel to national advertisers. All deferred costs related to
the sale and production of directories are recognized ratably
over the life of each directory under the deferral and
amortization method of accounting, with cost recognition
commencing in the month of delivery.



| |                                       
| | --------------------------------------
| | General and Administrative
    Expense

Our general and administrative expense consists
primarily of the costs of advertising, promotion and marketing,
administrative staff, information technology, training, account
billing, corporate management, office and facilities expense and
bad debt expense. All of our general and administrative expense
is recognized in the period in which it is incurred.
Historically, our general and administrative expense has
included the costs of other services, that were shared among
Qwest affiliates, including real estate, information
technologies, finance and human resources. However, since we
terminated the transition services agreements with Qwest as of
December 31, 2003, we now incur these costs directly. Our
general and administrative expense has increased as a
stand-alone company and may continue to increase.



| |                     
| | --------------------
| | Income Tax Provision

We account for income taxes under the asset and
liability method of accounting. Deferred tax assets and
liabilities are recorded to reflect the future tax consequences
of temporary differences between the financial reporting bases
of assets and liabilities and their tax bases at each year end.
Deferred tax assets and liabilities are measured using the
enacted income tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled.
Deferred tax assets and liabilities are adjusted for future
income tax rate changes in the year the changes are enacted.
Deferred tax assets are recognized for operating losses and tax
credit carry forwards if management believes, based upon
existing evidence, that it is more likely than not that the
carry forward will be utilized. All deferred tax assets are
reviewed for realizability and valuation allowances are recorded
if it is more likely than not that the deferred tax assets will
not be realized.

Items Affecting Comparability Between
Periods

Our revenue and cost of revenue for the twelve
months following the consummation of the Acquisition were
approximately $120.6 million and $31.6 million lower,
respectively, than our revenue and cost of revenue would have
been otherwise because the Acquisition was accounted for under
the purchase method of accounting. As such, the results of
operations for the three months ended September 30, 2004,
the combined three months ended September 30, 2003, the
nine months ended September 30, 2004 and the combined nine
months ended September 30, 2003 are not comparable.

Dex West financial information for the period
prior to the consummation of the Acquisition on
September 9, 2003 reflects a historic basis of accounting.
Financial information for the period subsequent to the
consummation of the Acquisition reflects a purchase accounting
basis of accounting. As a result of the change in basis of
assets, the financial information for these respective periods
are not comparable.

Upon the consummation of the Acquisition, we
became a stand-alone company. Operating as a separate entity
from Qwest would have increased our costs for the periods from
July 1 to September 9, 2003 and from January 1 to
September 9, 2003. In addition, we have incurred
incremental pension and benefit costs as a stand-alone entity.
The increase in pension costs results from the elimination of
pension credits included in Dex Wests historical results
related to Qwests over-funded pension plan from which Dex
Media West will no longer benefit. Additionally, we have
incurred increased employee benefit costs due to separation from
Qwests larger employee base. In addition, we have paid an
annual advisory fee of $2.0 million to the Sponsors. In
connection with the initial public offering of our indirect
parent, Dex Media, the annual advisory fees payable

20



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##### Table of Contents



under the management consulting agreements with
the Sponsors were terminated. Future stand-alone costs incurred
are unpredictable due to various factors.


Historically, Dex West was included in the
consolidated federal income tax returns filed by Qwest. Dex West
had an informal agreement with Qwest pursuant to which Dex West
was required to compute its provision for income taxes on a
separate return basis and pay to, or receive from, Qwest the
separate U.S. federal income tax return liability or
benefit so computed, if any. For federal income tax purposes,
the Acquisition is treated as an asset purchase and we generally
have a tax bases in the acquired assets equal to the purchase
price. As a result, for tax purposes, we will be able to
depreciate assets, primarily intangibles, with higher tax bases
after the consummation of the Acquisition. These step-ups in tax
bases for intangibles, which will be amortized over
15 years, should significantly reduce our cash income taxes
over that period.

In connection with the Acquisition, we incurred
substantial indebtedness. As a result, we incur significant
interest expense and we have significant repayment obligations.
The interest expense relating to this debt adversely affects our
net income.

Results of Operations



| |                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------
| | The Three Months Ended September 30,
    2004 Compared to the Combined Three Months Ended
    September 30, 2003.

The results of operation below include the
effects of purchase accounting for both periods presented and
therefore are not comparable. Please refer to the section
Items Affecting Comparability Between Periods and
the discussion below for detail regarding the effects of these
adjustments.

|                                                                                                           |                             |                          |        |                 |         |              |       |               |        |   |        |         |         |   |        |         |         | 
|---------------------------------------------------------------------------------------------------------- | --------------------------- | ------------------------ | ------ | --------------- | ------- | ------------ | ----- | ------------- | ------ | - | ------ | ------- | ------- | - | ------ | ------- | ------- | 
|                                                                                                           |                             |                          |        |                 |         |             
|                                                                                                           |                             | Dex Media West           |        | Predecessor     |         | Combined    
|                                                                                                           |                             |                          |        |                 |         |             
|                                                                                                           |                             | Three Months             |        | Period from     |         | Period from  |       | Three Months 
|                                                                                                           |                             | Ended                    |        | September 10 to |         | July 1 to    |       | Ended        
|                                                                                                           |                             | September 30,            |        | September 30,   |         | September 9, |       | September 30,
|                                                                                                           |                             | 2004                     |        | 2003            |         | 2003         |       | 2003         
|                                                                                                           |                             |                          |        |                 |         |              |       |              
|                                                                                                           |                             |                         
|                                                                                                           |                             | (Dollars in thousands)  
|Revenue:                                                                                                   |                             |                          |        |                 |         |              |       |               |        |   |        |         |         |   |        |        
|                                                                                                           | Local directory services    |                          | $      | 189,114         |         |              | $     | 12,781        |        |   | $      | 142,584 |         |   | $      | 155,365 |        
|                                                                                                           | National directory services |                          |        | 27,810          |         |              |       | 375           |        |   |        | 25,960  |         |   |        | 26,335  |        
|                                                                                                           |                             |                          |        |                 |         |              |       |               |        |   |        |         |         |   |        |        
|                                                                                                           |                             | Total directory services |        |                 | 216,924 |              |       |               | 13,156 |   |        |         | 168,544 |   |        |         | 181,700 | 
|Other revenue                                                                                              |                             |                          | 4,772  |                 |         |              | 1,415 |               |        |   | 4,195  |         |         |   | 5,610  |        
|                                                                                                           |                             |                          |        |                 |         |              |       |               |        |   |        |         |         |   |        |        
|                                                                                                           |                             | Total revenue            |        |                 | 221,696 |              |       |               | 14,571 |   |        |         | 172,739 |   |        |         | 187,310 | 
|Cost of revenue                                                                                            |                             |                          | 68,537 |                 |         |              | 4,819 |               |        |   | 53,909 |         |         |   | 58,728 |        
|                                                                                                           |                             |                          |        |                 |         |              |       |               |        |   |        |         |         |   |        |        
|                                                                                                           | Gross profit                |                          | $      | 153,159         |         |              | $     | 9,752         |        |   | $      | 118,830 |         |   | $      | 128,582 |        
|                                                                                                           | Gross margin                |                          |        | 69.1%           |         |              |       | 66.9%         |        |   |        | 68.8%   |         |   |        | 68.6%   |        
|General and administrative expense, including bad
    debt expense and termination of annual advisory fees |                             | $                        | 44,040 |                 |         | $            | 7,359 |               |        | $ | 22,052 |         |         | $ | 29,411 |        



| |        
| | -------
| | Revenue

Total revenue increased by $34.4 million, or
18.4%, to $221.7 million for the three months ended
September 30, 2004 from $187.3 million for the
combined three months ended September 30, 2003. Total
revenue was $8.7 million and $40.1 million lower for
the three months ended September 30, 2004 and the combined
three months ended September 30, 2003, respectively, due to
the effects of purchase accounting. Excluding the effects of
purchase accounting, total revenue increased $3.0 million,
or 1.3%. Total revenue, excluding the effects of purchase
accounting, included $225.6 million in directory services
revenue and $4.8 million in revenue for all other products
for the nine months ended September 30, 2004.

21



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Total directory services revenue, which consists
of local and national directory services revenue, increased
$35.2 million, or 19.4%, to $216.9 million for the
three months ended September 30, 2004 from
$181.7 million for the combined three months ended
September 30, 2003. Total directory services revenue was
$8.7 million and $40.1 million lower for the three
months ended September 30, 2004 and the combined three
months ended September 30, 2003, respectively, due to the
effects of purchase accounting. Excluding the effects of
purchase accounting, total directory services revenue increased
$3.8 million, or 1.7%.

Directory services revenue is affected by a
variety of volume and pricing factors. Volume related factors
include quantity of advertisements sold, the change in mix of
advertisements among our product families, the proportion of
advertisements sold with premium features and the volume of
promotional services obtained from our advertisers in exchange
for our publication of their advertisement in our directories
and the number of local advertiser disconnects during a period.
Pricing factors include price increases related to our standard
rates that may be made from time to time in varying markets for
varying categories, offset by discount programs that may be
initiated in local markets for certain advertiser headings. Such
factors generally affect the dollar volume of orders initiated
in a period which are recognized as revenue over the life of a
given directory, beginning in the month of delivery. Multiple
factors contribute to changes in revenue, and although no single
factor can be distinguished as the primary cause, improvements
in product mix and pricing, combined with stable account
renewal, contributed to our changes in directory services
revenue.

Local directory services revenue increased
$33.7 million, or 21.7%, to $189.1 million for the
three months ended September 30, 2004 compared to
$155.4 million for the combined three months ended
September 30, 2003. Local directory services revenue was
$3.6 million and $32.5 million lower for the three
months ended September 30, 2004 and the combined three
months ended September 30, 2003, respectively, due to the
effects of purchase accounting. Excluding the effects of
purchase accounting, local directory services revenue increased
$4.8 million, or 2.6%.

Revenue from national advertisers increased
$1.5 million, or 5.6%, to $27.8 million for the three
months ended September 30, 2004 as compared to
$26.3 million for the combined three months ended
September 30, 2003. Revenue from national advertisers was
$5.1 million and $7.6 million lower for the three
months ended September 30, 2004 and the combined three
months ended September 30, 2003, respectively, due to the
effects of purchase accounting. Excluding the effects of
purchase accounting in 2003, revenue from national advertisers
decreased $1.0 million, or 2.9%.

Other revenue decreased by $0.8 million, or
14.9%, to $4.8 million for the three months ended
September 30, 2004 from $5.6 million for the combined
three months ended September 30, 2003. In 2004, we
substantially reduced the number of products in our direct
marketing services product line which represents
$0.4 million of the decline between periods.



| |                
| | ---------------
| | Cost of Revenue

Cost of revenue recognized was $68.5 million
for the three months ended September 30, 2004 compared to
$58.7 million for the combined three months ended
September 30, 2003. Recognized cost of revenue was
$0.8 million and $11.5 million lower than it would
have been for the three months ended September 30, 2004 and
the combined three months ended September 30, 2003,
respectively, due to the effects of purchase accounting.
Excluding the effects of purchase accounting, cost of revenue
recognized decreased $0.9 million, or 1.3%. Cost of revenue
recognized represented 30.1% and 30.9% of revenue, excluding the
effects of purchase accounting, for the three months ended
September 30, 2004 and the combined three months ended
September 30, 2003, respectively.

For the three months ended September 30,
2004 and the combined three months ended September 30,
2003, we incurred costs subject to deferral and amortization of
$74.0 million and $76.6 million, respectively. The
decrease in incurred costs is primarily due to decreases in
employee costs, direct costs of publishing and other costs of
revenue.

22



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Employee costs incurred decreased
$2.2 million, or 6.7%, to $30.8 million for the three
months ended September 30, 2004 from $33.0 million for
the combined three months ended September 30, 2003. The
decrease is due primarily to changes in sales incentives and a
reduction in the number of employees.

Direct costs of publishing incurred, which
primarily included paper, printing and distribution, were
$25.2 million and $25.7 million for the three months
ended September 30, 2004 and the combined three months
ended September 30, 2003, respectively.

Contracting and professional fees incurred
increased $3.8 million to $5.3 million from
$1.5 million for the three months ended September 30,
2004 and the combined three months ended September 30,
2003, respectively. The increase is primarily due to on-going
support related to our new production system.

Other costs of revenue incurred, which primarily
includes systems expense, office and facilities expense and
national commissions were $12.7 million and
$16.4 million for the three months ended September 30,
2004 and the combined three months ended September 30,
2003, respectively.



| |             
| | ------------
| | Gross Profit

Our gross profit was $153.2 million for the
three months ended September 30, 2004 compared to
$128.6 million for the combined three months ended
September 30, 2003. Excluding the effects of purchase
accounting, gross profit for the three months ended
September 30, 2004 and the combined three months ended
September 30, 2003, was $161.1 million and
$157.2 million, respectively. Gross margin, excluding the
effects of purchase accounting, increased to 69.9% for the three
months ended September 30, 2004 from 69.1% for the combined
three months ended September 30, 2003.



| |                                       
| | --------------------------------------
| | General and Administrative
    Expense

General and administrative expense, excluding
depreciation and amortization, increased $14.6 million, or
49.7%, to $44.0 million for the three months ended
September 30, 2004 from $29.4 million for the combined
three months ended September 30, 2003. The increase was
primarily due to the termination of annual advisory fees and
increases in employee costs and advertising expense offset by
decrease in bad debt expense.

Employee costs, which include salaries and wages,
benefits and other employee costs, increased $7.2 million
to $13.7 million for the three months ended
September 30, 2004 from $6.5 million for the combined
three months ended September 30, 2003. Salaries and wages
increased $1.2 million, or 27.3%, to $5.6 million for
the three months ended September 30, 2004 from
$4.4 million for the combined three months ended
September 30, 2003. Benefits were $2.8 million and
$1.7 million for the three months ended September 30,
2004 and the combined three months ended September 30,
2003, respectively. The increase in benefits is a result of
higher costs of medical benefits and to the absence of pension
credits in 2004 related to Qwests over-funded pension plan
from which benefits were recognized in 2003. Other employee
costs were $5.3 million and $0.4 million for the three
months ended September 30, 2004 and the combined three
months ended September 30, 2003, respectively. The increase
in other expenses is due primarily to accrued severance costs of
$4.7 million related to the planned workforce reduction as
a result of efficiencies gained by the replacement of our core
production platform with technology from Amdocs.

Advertising increased $2.2 million, or
91.7%, to $4.6 million for the three months ended
September 30, 2004 from $2.4 million for the combined
three months ended September 30, 2003 due to additional
media advertisements and exclusivity arrangements designed to
increase consumer awareness, including promoting the new Dex
trademark and product offerings. Advertising as a percent of
revenue, excluding the effects of purchase accounting, increased
to 2.0% for the three months ended September 30, 2004 from
1.1% for the combined three months ended September 30, 2003.

Contracting and professional fees decreased
$2.7 million, or 35.1%, to $5.0 million for the three
months ended September 30, 2004 from $7.7 million for
the combined three months ended September 30, 2003.

Bad debt expense decreased $1.8 million, or
24.1%, to $5.5 million for the three months ended
September 30, 2004 from $7.3 million for the combined
three months ended September 30, 2003. Bad debt

23



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##### Table of Contents



expense as a percentage of revenue, excluding the
effects of purchase accounting, was 2.4% for the three months
ended September 30, 2004 as compared to 3.2% for the
combined three months ended September 30, 2003. The
decrease in bad debt expense is a result of improved and
accelerated collection efforts on local advertiser accounts,
combined with a decline in direct write-offs of national
accounts as compared to the prior year period.


In connection with the Offering we paid
$5.0 million to each of our two Sponsors to eliminate the
$2.0 million aggregate annual advisory fee payable under
our management consulting agreements. This non-recurring
termination fee was not incurred in the prior year period. The
annual advisory fee paid in prior periods is included in
contracting and professional fees.

All other general and administrative expense was
$5.2 million and $5.5 million for the three months
ended September 30, 2004 and the combined three months
ended September 30, 2003, respectively.



| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | The Nine Months Ended September 30,
    2004 Compared to the Combined Nine Months Ended
    September 30, 2003.

The results of operation below include the
effects of purchase accounting for both periods presented and
therefore are not comparable. Please refer to the section
Items Affecting Comparability Between Periods and
the discussion below for detail regarding the effects of these
adjustments.

|                                                                                                           |                             |                        |         |                 |  |                 |        |               |  |   |         |        |  |   |         |        | 
|---------------------------------------------------------------------------------------------------------- | --------------------------- | ---------------------- | ------- | --------------- |  | --------------- | ------ | ------------- |  | - | ------- | ------ |  | - | ------- | ------ | 
|                                                                                                           |                             |                        |         |                 |  |                
|                                                                                                           |                             | Dex Media West         |         | Predecessor     |  | Combined       
|                                                                                                           |                             |                        |         |                 |  |                
|                                                                                                           |                             | Nine Months            |         | Period from     |  | Period from     |        | Nine Months  
|                                                                                                           |                             | Ended                  |         | September 10 to |  | January 1       |        | Ended        
|                                                                                                           |                             | September 30,          |         | September 30,   |  | to September 9, |        | September 30,
|                                                                                                           |                             | 2004                   |         | 2003            |  | 2003            |        | 2003         
|                                                                                                           |                             |                        |         |                 |  |                 |        |              
|                                                                                                           |                             |                       
|                                                                                                           |                             | (Dollars in thousands)
|Revenue:                                                                                                   |                             |                        |         |                 |  |                 |        |               |  |   |         |        |  |   |         |       
|Local directory services                                                                                   |                             | $                      | 567,871 |                 |  | $               | 12,781 |               |  | $ | 521,066 |        |  | $ | 533,847 |       
|                                                                                                           | National directory services |                        |         | 63,293          |  |                 |        | 375           |  |   |         | 94,349 |  |   |         | 94,724 | 
|                                                                                                           |                             |                        |         |                 |  |                 |        |               |  |   |         |        |  |   |         |       
|Total directory services                                                                                   |                             |                        | 631,164 |                 |  |                 | 13,156 |               |  |   | 615,415 |        |  |   | 628,571 |       
|Other revenue                                                                                              |                             |                        | 14,815  |                 |  |                 | 1,415  |               |  |   | 14,745  |        |  |   | 16,160  |       
|                                                                                                           |                             |                        |         |                 |  |                 |        |               |  |   |         |        |  |   |         |       
|Total revenue                                                                                              |                             |                        | 645,979 |                 |  |                 | 14,571 |               |  |   | 630,160 |        |  |   | 644,731 |       
|Cost of revenue                                                                                            |                             |                        | 198,272 |                 |  |                 | 4,819  |               |  |   | 193,282 |        |  |   | 198,101 |       
|                                                                                                           |                             |                        |         |                 |  |                 |        |               |  |   |         |        |  |   |         |       
|Gross profit                                                                                               |                             | $                      | 447,707 |                 |  | $               | 9,752  |               |  | $ | 436,878 |        |  | $ | 446,630 |       
|Gross margin                                                                                               |                             |                        | 69.3%   |                 |  |                 | 66.9%  |               |  |   | 69.3%   |        |  |   | 69.3%   |       
|General and administrative expense, including bad
    debt expense and termination of annual advisory fees |                             | $                      | 102,325 |                 |  | $               | 7,359  |               |  | $ | 74,241  |        |  | $ | 81,600  |       



| |        
| | -------
| | Revenue

Total revenue increased by $1.2 million or
0.2%, to $646.0 million for the nine months ended
September 30, 2004 from $644.7 million for the
combined nine months ended September 30, 2003. Total
revenue for the nine months ended September 30, 2004 and
the combined nine months ended September 30, 2003 was
$46.8 million and $40.1 million lower, respectively,
than it would have been due to the effects of purchase
accounting. Excluding the effects of purchase accounting, total
revenue increased $8.0 million, or 1.2%. Total revenue,
excluding the effects of purchase accounting, included
$678.0 million in directory services revenue and
$14.8 million in revenue for all other products for the
nine months ended September 30, 2004.

Total directory services revenue, which consists
of local and national directory services revenue, increased
$2.6 million, or 0.4% to $631.2 million for the nine
months ended September 30, 2004 from $628.6 million
for the combined nine months ended September 30, 2003.
Total directory services revenue for the nine months

24



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##### Table of Contents



ended September 30, 2004 and the combined
nine months ended September 30, 2003 was $46.8 million
and $40.1 million lower, respectively, than it would have
been due to the effects of purchase accounting. Excluding the
effects of purchase accounting, total directory services revenue
increased $9.3 million, or 1.4%.


Directory services revenue is affected by a
variety of volume and pricing factors. Volume related factors
include quantity of advertisements sold, the change in mix of
advertisements among our product families, the proportion of
advertisements sold with premium features and the volume of
promotional services obtained from our advertisers in exchange
for our publication of their advertisement in our directories.
Pricing factors include price increases related to our standard
rates that may be made from time to time in varying markets for
varying categories, offset by discount programs that may be
initiated in local markets for certain advertiser headings. Such
factors generally affect the dollar volume of orders initiated
in a period which are recognized as revenue over the life of a
given directory, beginning in the month of delivery. Multiple
factors contribute to changes in revenue, and although no single
factor can be distinguished as the primary cause, improvements
in product mix and pricing, combined with stable account
renewal, contributed to our changes in directory services
revenue.

Local directory services revenue increased
$34.0 million, or 6.4%, to $567.9 million for the nine
months ended September 30, 2004 compared to
$533.8 million for the combined nine months ended
September 30, 2003. Local directory services revenue for
the nine months ended September 30, 2004 and the combined
nine months ended September 30, 2003 was $9.6 million
and $32.5 million lower, respectively, than it would have
been due to the effects of purchase accounting. Excluding the
effects of purchase accounting, local directory services revenue
increased $11.2 million, or 2.0% to $577.5 million for
the nine months ended September 30, 2004. Local directory
services revenue, excluding the effects of purchase accounting,
accounted for 83.4% and 82.7% of revenue for the nine months
ended September 30, 2004 and the combined nine months ended
September 30, 2003, respectively.

Revenue from national advertisers decreased
$31.4 million, or 33.2%, to $63.3 million for the nine
months ended September 30, 2004, as compared to
$94.7 million for the combined nine months ended
September 30, 2003. Revenue from national advertisers for
the nine months ended September 30, 2004 and the combined
nine months ended September 30, 2003 was $37.2 million
and $7.6 million lower, respectively, than it would have
been due to the effects of purchase accounting. Excluding the
effects of purchase accounting, revenue from national
advertisers decreased $1.8 million, or 1.8%. Revenue from
national advertisers excluding the effects of purchase
accounting, for the nine months ended September 30, 2004
accounted for 14.5% of revenue as compared to 14.9% for the
combined nine months ended September 30, 2003.

Other revenue decreased by $1.3 million, or
8.3%, to $14.8 million for the nine months ended
September 30, 2004 from $16.2 million for the combined
nine months ended September 30, 2003. In 2004, we
substantially reduced the number of products in our direct
marketing services product line which represented
$0.7 million of the decline between periods.



| |                
| | ---------------
| | Cost of Revenue

Cost of revenue recognized was
$198.3 million for the nine months ended September 30,
2004 compared to $198.1 million for the combined nine
months ended September 30, 2003. Recognized cost of revenue
for the nine months ended September 30, 2004 and the
combined nine months ended September 30, 2003 was
$10.5 million and $11.5 million lower, respectively,
than it would have been due to the effects of purchase
accounting. Excluding the effects of purchase accounting, cost
of revenue recognized decreased $0.8 million, or 0.4%. Cost
of revenue recognized, excluding the effects of purchase
accounting, represented 30.1% of revenue for the nine months
ended September 30, 2004, compared to 30.6% of revenue for
the combined nine months ended September 30, 2003.

For the nine months ended September 30, 2004
and for the combined nine months ended September 30, 2003,
we incurred costs subject to deferral and amortization of
$221.0 million and $211.6 million, respectively. The
increase in incurred costs is primarily due to increased
on-going support costs related to our new production system and
to the shifts in publication schedules of eight directories from
December 2003 to the first quarter of 2004, which totaled
$9.8 million.

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Employee costs incurred decreased by
$5.3 million, or 5.5%, to $91.5 million for the nine
months ended September 30, 2004 from $96.8 million for
the combined nine months ended September 30, 2003. The
decrease is a result of changes to sales incentives and a
reduction in the number of employees.

Direct costs of publishing incurred, which
primarily include paper, printing and distribution, increased
$9.6 million, or 13.4% to $81.0 million for the nine
months ended September 30, 2004 from $71.4 million for
the combined nine months ended September 30, 2003. The
differences in directory publication schedules between the
periods contributed $7.1 million of the increase.

Contracting and professional fees incurred
increased $7.7 million to $11.5 million for the nine
months ended September 30, 2004 from $3.8 million for
the combined nine months ended September 30, 2003. The
increase is primarily due to on-going support related to our new
production system.

Other costs of revenue incurred, which primarily
includes systems expense, national commissions, and office and
facilities expense was $37.0 million for the nine months
ended September 30, 2004 compared to $39.6 million for
the combined nine months ended September 30, 2003.



| |             
| | ------------
| | Gross Profit

Our gross profit was $447.7 million for the
nine months ended September 30, 2004 compared to
$446.6 million for the combined nine months ended
September 30, 2003. Excluding the effects of purchase
accounting, gross profit for the nine months ended
September 30, 2004 and the combined nine months ended
September 30, 2003 was $484.0 million and
$475.2 million, respectively. Gross margin, excluding the
effects of purchase accounting, increased to 69.9% for the nine
months ended September 30, 2004 from 69.4% for the combined
nine months ended September 30, 2003.



| |                                       
| | --------------------------------------
| | General and Administrative
    Expense

General and administrative expense, excluding
depreciation and amortization, increased $20.7 million, or
25.4%, to $102.3 million for the nine months ended
September 30, 2004 from $81.6 million for the combined
nine months ended September 30, 2003. The increase was
primarily due to the termination of annual advisory fees and
increases in employee costs, advertising expense and contracting
and professional fees offset by decreases in bad debt expense
and other general and administrative.

Employee costs increased $14.0 million, or
84.8%, to $30.5 million for the nine months ended
September 30, 2004 and from $16.5 million for the
combined nine months ended September 30, 2003,
respectively. Employee costs include salaries and wages,
benefits and other employee costs. Salaries and wages increased
$5.6 million, or 53.8%, to $16.0 million for the nine
months ended September 30, 2004 from $10.4 million for
the combined nine months ended September 30, 2003. The
increase in salaries and wages was due to additional stand-alone
costs resulting from operating the Company as a separate entity
from Qwest. Prior to 2004, the functions of finance, human
resources, real estate and information technology were provided
primarily by Qwest and were included in other general and
administrative expense as affiliate expenses. Benefits increased
$3.6 million, or 75.0%, to $8.4 million for the nine
months ended September 30, 2004 from $4.8 million for
the combined nine months ended September 30, 2003. This
increase is primarily due to higher costs of medical benefits
and to the absence of pension credits recognized in 2004 related
to Qwests over-funded pension plan from which benefits
were recognized in 2003. Other employee costs were
$6.1 million and $1.3 million for the nine months
ended September 30, 2004 and for the combined nine months
ended September 30, 2003, respectively. The increase in
other employee costs is primarily related to accrued costs of
$4.7 million related to the planned workforce reduction as
a result of the efficiencies gained by the replacement of our
core production platform with technology from Amdocs.

Advertising expense increased $5.6 million,
or 72.7%, to $13.3 million for the nine months ended
September 30, 2004 from $7.7 million for the combined
nine months ended September 30, 2003 due to additional
media advertisements and exclusivity arrangements designed to
increase consumer awareness, including promoting the new Dex
trademark and product offerings. Advertising as a percent of
revenue,

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excluding the effects of purchase accounting,
increased to 1.9% for the nine months ended September 30,
2004 compared to 1.1% for the combined nine months ended
September 30, 2003.


Contracting and professional fees increased
$2.4 million, or 18.3%, to $15.5 million for the nine
months ended September 30, 2004 from $13.1 million for
the combined nine months ended September 30, 2003.

Bad debt expense decreased $3.6 million, or
17.0%, to $17.4 million for the nine months ended
September 30, 2004 from $20.9 million for the combined
nine months ended September 30, 2003. Bad debt expense as a
percent of total revenue, excluding the effects of purchase
accounting, was 2.5% for the nine months ended
September 30, 2004 compared to 3.1% for the combined nine
months ended September 30, 2003. The decrease in bad debt
expense is primarily a result of improved and accelerated
collection efforts on local advertiser accounts combined with
higher expense in combined 2003 relating to the bankruptcy of a
specific CMR.

In connection with the Offering, we paid
$5.0 million to each of our two Sponsors to eliminate the
$2.0 million aggregate annual advisory fee payable under
the management consulting agreements. This non-recurring
termination fee was not incurred in the prior year period. The
annual advisory fee paid in prior periods is included in
contracting and professional fees.

All other general and administrative expense,
decreased $7.8 million, or 33.3%, to $15.6 million for
the nine months ended September 30, 2004 from
$23.4 million for the combined nine months ended
September 30, 2003. For the combined nine months ended
September 30, 2003, other general and administrative
expense included affiliate charges from Qwest, including
finance, human resources, real estate and information technology
with the costs of such expenses incurred directly in salaries
and wages for the nine months ended September 30, 2004.

Historical Results of Operations

The condensed consolidated results of operations
for the three months and nine months ended September 30,
2004 include the results of operations for Dex Media West
subsequent to the Acquisition, whereas the condensed
consolidated results of operations for three months and nine
months ended September 30, 2003 do not include the results
of Dex West prior to the Acquisition. Consequently, the results
of operations for the periods presented in the financial
statements are not comparable. As such, we have provided a
comparison of the three months and nine months ended
September 30, 2004 to the combined three months and nine
months ended September 30, 2003 in the previous section. In
addition and as described further below, in connection with the
Acquisition, we acquired intangible assets subject to
amortization and incurred significant indebtedness.



| |                            
| | ---------------------------
| | Amortization of Intangibles

In connection with the Acquisition, we recorded
significant intangible assets at the date of Acquisition.
Substantial portions of these assets have definite lives and are
subject to amortization. For the three months ended
September 30, 2004, the nine months ended
September 30, 2004 and the period from September 10 to
September 30, 2003, we recognized $57.8 million,
$173.5 million and $14.1 million, respectively, in
amortization expense related to our identifiable intangible
assets.



| |                 
| | ----------------
| | Interest Expense

We incurred significant indebtedness in
connection with the Acquisition. As such, interest expense
subsequent to and prior to the Acquisition are not comparable.
We recognized interest expense of $54.4 million,
$162.3 million and $16.6 million for the three months
ended September 30, 2004, the nine months ended
September 30, 2004 and the period from September 10 to
September 30, 2003, respectively. Interest expense for the
three months and nine months ended September 30, 2004
includes $19.8 million of amortization of deferred
financing costs and $1.8 million of early redemption
premiums paid to redeem a portion of our senior subordinated
notes.

27



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| |             
| | ------------
| | Income Taxes

SFAS No. 109 requires that we recognize
deferred income tax assets on net operating losses to the extent
realization of these assets is more likely than not. As of
September 30, 2004 we have recorded $18.9 million of
deferred income tax assets resulting primarily from net
operating loss carryforwards. Based upon current projections of
income and expenses, we have determined that it is more likely
than not that we will utilize these deferred tax assets before
the expiration of the net operating loss carryforward periods.
Accordingly, no valuation allowance has been recorded.

Liquidity and Capital Resources



| |         
| | --------
| | Overview

Following the consummation of the Acquisition,
our primary source of liquidity continues to be cash flow
generated from operations. We also have availability under our
revolving credit facility, subject to certain conditions.

In connection with the Acquisition, we incurred
$2,213.0 million of borrowings under our credit facilities
and $1,165.0 million of indebtedness with the issuance of
the outstanding notes. As of September 30, 2004, we had
outstanding $3,014.8 million in aggregate indebtedness due
to aggregate debt repayments since the Acquisition of
$363.2 million. As a result, we are significantly leveraged
and our liquidity requirements will be significantly increased,
primarily due to increased debt service obligations. In
connection with the Offering, we redeemed $18.2 million of
our 9 7/8% senior subordinated notes at a redemption
price of 109.875% plus accrued and unpaid dividends on
August 26, 2004 with a portion of the proceeds from the
Offering.

Our credit facilities consist of a revolving
credit facility and term loan facilities. The revolving credit
facility expiring in September 2009 is comprised of total
principal of up to $100.0 million available for general
corporate purposes, subject to certain conditions. The term loan
facilities consist of a Tranche A term loan facility and a
Tranche B term loan facility, which mature in September
2009 and March 2010, respectively.

Our credit facilities bear interest, at our
option, at either:



| |   |                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a base rate used by JPMorgan Chase Bank, plus an
    applicable margin; or                                                                                                                                                              
|
| |  | a eurocurrency rate on deposits for one, two,
    three or six-month periods (or nine or twelve-month periods if,
    at the time of the borrowing, all lenders agree to make such a
    duration available), plus an applicable margin.

The applicable margins on loans under our
revolving credit facility, the Tranche A term loan facility
and the Tranche B term loan facility are subject to change
depending on our leverage ratio.

In addition to paying interest on outstanding
principal amounts under our credit facilities, we are required
to pay an annual commitment fee of 0.375% (reduced from 0.5%
when the credit facilities were amended on June 11, 2004)
to the lenders for the unused commitments under our revolving
credit facility. The commitment fee is payable quarterly in
arrears and is subject to change depending on our leverage ratio.

On June 11, 2004, we entered into an amended
and restated credit agreement to, among other things,
(i) reduce the applicable margins on loans under our credit
facilities and the commitment fee on the revolving credit
facility, (ii) permit the redemption of all of Dex
Medias 5% Series A preferred stock, which was held by
our Sponsors and management, plus accrued and unpaid dividends,
(iii) permit the redemption of up to 35% of our outstanding
9 7/8% senior subordinated notes due 2013 and its
associated redemption premium, plus accrued and unpaid interest
from proceeds from the Offering, (iv) make a final lump sum
payment to our Sponsors to terminate the annual advisory fee
payable under the management consulting agreement, and
(v) permit us to distribute to Dex Media the funds required
to fund the quarterly dividends on Dex Medias common stock
if and when such dividends are declared, up to
$40.6 million annually. The amendments to the credit
agreement, except the repricing of the applicable margins and
commitment fee which were effective on June 11, 2004, were
effective immediately upon the consummation of the Offering on
July 27, 2004.

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Our credit facilities contain negative and
affirmative covenants and requirements affecting us and domestic
subsidiaries that we create or acquire, with certain exceptions
set forth in our credit agreement. Our credit facilities contain
the following negative covenants and restrictions, among others:
restrictions on liens, sale-leaseback transactions, incurrence
of debt, payment of dividends and other restricted junior
payments, redemptions and stock repurchases, consolidations and
mergers, acquisitions, asset dispositions, investments, loans,
advances, changes in line of business, changes in fiscal year,
restrictive agreements with subsidiaries, transactions with
affiliates, capital expenditures, amendments to charter, by-laws
and other material documents, hedging agreements and
inter-company indebtedness. Our credit facilities also require
us to meet certain financial covenants, including leverage
ratios, an interest coverage ratio and a fixed charges coverage
ratio.

We entered into a billing and collection services
agreement with Qwest LEC upon the consummation of the
Acquisition, which was renewed effective November 1, 2004.
Under the renewed agreement, Qwest LEC will continue until
December 31, 2008 to bill and collect, on our behalf,
amounts owed by our accounts, that are also Qwest local
telephone customers, for our directory services. In 2003, Qwest
LEC billed approximately 47% of our revenue, excluding the
effects of purchase accounting, on our behalf, and we billed the
remaining 53% directly. Qwest LEC bills the account on the same
billing statement on which it bills the customer for local
telephone service. In conjunction with the Acquisition, we
developed and continue to maintain the ability to transition
those accounts billed by Qwest from the Qwest LEC billing and
collection system to our own billing and collection system,
within approximately two weeks should we choose to do so.

Historically, our Predecessors principal
source of liquidity has been cash flow generated from
operations. Prior to the consummation of the Acquisition, Dex
Wests primary liquidity requirements were for debt service
on that portion of a Qwest Dex line of credit borrowing
arrangement with an affiliate of Qwest which was apportioned to
it, debt service on $750.0 million of debt issued by Qwest
Dex, dividends to Qwest, income tax payments to Qwest for the
estimated tax liability of Qwest Dex as well as capital
expenditures and working capital. Our Predecessor historically
generated sufficient cash flow to fund operations and
investments and to make payments to Qwest.



| |                     
| | --------------------
| | Sources of Liquidity

Net cash provided by operations was
$206.2 million and $61.5 million for the nine months
ended September 30, 2004 and for the period from
September 10 to September 30, 2003, respectively. Cash
provided by operations was generated primarily from cash
receipts from the sale of directory advertisements, reduced by
cash disbursements for cost of revenue incurred, general and
administrative expenses and interest expense.

Net cash used for investing activities was
$20.5 million and $4,346.4 million for the nine months
ended September 30, 2004 and for the period from
September 10 to September 30, 2003, respectively. The
principal use of cash for investing activities for the nine
months ended September 30, 2004 was $25.7 million of
expenditures for property, plant and equipment and software. The
principal source of cash flows from investing activities for the
nine months ended September 30, 2004 was $5.2 million
cash received in settlement of the working capital true up for
assets acquired and liabilities assumed in the Acquisition. The
principal use of cash for investing activities for the period
from September 10 to September 30, 2003 was
$4.3 billion for the acquisition of Dex West including
acquisition costs.

Net cash (used for) and provided by for financing
activities was ($187.5 million) and $4,293.3 million
for the nine months ended September 30, 2004 and for the
period from September 10 to September 30, 2003,
respectively. Significant uses of cash for financing activities
for the nine months ended September 30, 2004 included
$188.2 million total debt repayments of which
$18.2 million was the redemption of the senior subordinated
notes in conjunction with the Offering. The main uses of cash
flows for the period from September 10 to
September 30, 2003 were $80.0 million of repayments on
long-term borrowings. The principal sources of cash flows for
the period from September 10 to September 30, 2003
were borrowings of $3.4 billion and contributions from
parent of $1.1 billion.

Our ability to make payments on and to refinance
our indebtedness and to fund planned capital expenditures will
depend to a large extent on our ability to generate cash in the
future. This, to a certain

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extent, is subject to general economic,
financial, competitive, legislative, regulatory and other
factors that are beyond our control. Based on our current level
of operations, we believe our cash flow from operations,
available cash and available borrowings under our credit
facilities will be adequate to meet our future liquidity needs
for at least the next 12 months.


We cannot assure you, however, that our business
will generate cash flow from operations in an amount sufficient
to enable us to pay our indebtedness or to fund our other
liquidity needs. The restrictive covenants under the note
indentures and credit agreement prohibit us from commingling the
funds of Dex Media East with ours. They also prohibit us from
borrowing any funds from Dex Media East. Despite the restrictive
covenants under the note indentures and credit agreement
limiting our ability to incur additional indebtedness and
dispose of our assets, the covenants allow for multiple sources
of limited liquidity that we may access to meet our ongoing
business needs, including:



| |      |                                                                                                                                                                                                                                                                                                                                                                                                             
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | i.   | Cash from operating cash flow.                                                                                                                                                                                                                                                                                                                                                                              
|
| | ii.  | Up to $100.0 million of the revolving credit
    facility available to us as of September 30, 2004.                                                                                                                                                                                                                                                                                                         
|
| | iii. | Other unsecured indebtedness which we may incur
    up to an aggregate principal amount of $75.0 million.                                                                                                                                                                                                                                                                                                   
|
| | iv.  | We may sell, or dispose of, assets up to
    $15.0 million annually, subject to an aggregate amount of
    $30.0 million.                                                                                                                                                                                                                                                                                   
|
| | v.   | The proceeds from any debt issuance which we may
    use as long as our leverage ratio is at or below 4.0 to 1.0.                                                                                                                                                                                                                                                                                           
|
| | vi.  | We may use the proceeds from any equity offering
    as follows: a) 50%, if our leverage ratio is above 4.0 to
    1.0 or b) 100%, if our leverage ratio is at or below 4.0 to
    1.0. As a condition to the closing of the Offering, we amended
    our credit facility to, among other things, allow us access to a
    portion of the proceeds from the Offering irrespective of our
    leverage ratio.

The credit agreement and indentures governing the
notes permit us to pursue the option of financing our capital
expenditures with capital leases as long as the aggregate
outstanding balance of capital leases is not in excess of
$45.0 million at any time. As of September 30, 2004,
the outstanding balance of capital leases was $0.5 million.

Our access to liquidity will improve
significantly when our leverage ratio drops below
4.0 to 1.0. The leverage ratio can be improved by
reducing debt level or increasing the amount of earnings before
interest, taxes, depreciation and amortization
(EBITDA). When our leverage ratio is under 4.0 to
1.0, we may retain any proceeds from debt or equity issuances
for any business purpose, except for optional repayment of
non-credit facility related debt with equity proceeds. If we use
equity proceeds to optionally repay a cumulative amount of
non-credit facility related debt in excess of
$20.0 million, we are required to repay equal amounts of
debt under our term facilities with the proceeds from the same
equity issuances.



| |                  
| | -----------------
| | Uses of Liquidity

We expect that our primary liquidity requirements
will be for debt service on our credit facilities and notes,
capital expenditures and working capital. During the
nine months ended September 30, 2004, we used the
funds generated from operations in excess of liquidity
requirements to make optional repayments under our credit
facilities.

Our debt portfolio, consisting of the amounts
borrowed under the credit facilities, senior notes and senior
subordinated notes, is comprised of 38.0% fixed rate debt
and 62.0% floating rate debt as of September 30, 2004.
Mandatory repayments or optional repayments under the credit
facilities in the future will cause the percentage of fixed rate
debt in our debt portfolio to increase. As our fixed rate debt
as a percentage of our total debt increases, the effective
interest rate of our debt portfolio will rise. Due to the
current low interest rate environment, the floating rate debt
under the credit facilities has significantly lower interest
rates than the

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fixed interest rates of our senior notes and
senior subordinated notes. If short-term interest rates rise,
the effective interest rate of our portfolio will also increase.


Tranche A and Tranche B of our term
loan credit facilities have required quarterly principal
repayments that were scheduled to begin June 30, 2004 and
continue until the maturity dates of the facilities. Any
optional repayment is applied to reduce the subsequent scheduled
repayments of each tranche, in direct order of the first four
scheduled repayments, and thereafter, ratably. As a result of
the optional repayments made since September 10, 2003, the
required quarterly payments for Tranche A and for
Tranche B in the period from June 30, 2004 to
March 31, 2005 were reduced to zero. The first mandatory
repayment is now due June 30, 2005 in the amount of
$38.6 million.

On November 10, 2003, our indirect parent,
Dex Media, issued $500.0 million of 8% Notes due 2013
and $389.0 million aggregate principal amount at maturity
of 9% Discount Notes due 2013 for aggregate gross proceeds of
$750.2 million. On February 11, 2004, our indirect
parent, Dex Media, issued another $361.0 million aggregate
principal amount at maturity of 9% Discount Notes due 2013
for gross proceeds of $250.5 million. The gross proceeds of
$750.2 million and $250.5 million were paid by Dex
Media as a distribution to its parent and ultimately to our
Sponsors. These notes are expected to be serviced and repaid
from distributions to Dex Media from us and our affiliate, Dex
Media East, subject in each case to restrictions contained in
our respective debt agreements. Accordingly, our cash
requirements will increase in May 2009 when cash interest
becomes payable on Dex Medias 9% Discount Notes.

Dex Media has no operations of its own and
derives all of its cash flow and liquidity from its
subsidiaries. It depends on the earnings and the distribution of
funds from us and Dex Media East to meet its business needs.
Although we are not obligated to make funds available to Dex
Media for any purpose, we are expected to make cash
distributions of up to $11.6 million to Dex Media
semi-annually to service its cash interest obligations on its
8% Notes due 2013, subject to certain covenant requirements
under the note indentures and credit agreement. Although the
terms of our credit facilities permit us to pay cash
distributions to Dex Media in an amount not to exceed 58% of the
regularly scheduled interest payments on the initial
$250.0 million of the $500.0 million of 8% Notes
due 2013, we must meet an interest coverage ratio for the four
consecutive fiscal quarters prior to the payment of the
distribution to Dex Media to cover our 58% portion of the
regularly scheduled interest payments on the remaining
$250.0 million of the $500.0 million of 8% Notes
due 2013. The indentures relating to our senior notes and senior
subordinated notes permit up to $50.0 million in any fiscal
year to be distributed to Dex Media to make interest payments on
Dex Medias 9% Discount Notes and 8% Notes.

Material Trends, Known Facts and
Uncertainties



| |                    
| | -------------------
| | Advertising Revenue

Directory services revenue is our most
significant source of revenue. Competition from other yellow
pages publishers affects our ability to attract and retain
advertisers and to increase advertising rates.



| |             
| | ------------
| | Paper Prices

Paper is our principal raw material.
Substantially all of the paper that we use (other than for
covers) is supplied by two companies: Nippon Paper Industries
USA Co., Ltd. (formerly Daishowa America Co., Ltd.) and Norske
Skog Canada (USA), Inc. Prices under the two agreements are
negotiated each year based on prevailing market rates, which
have been declining consistent with general U.S. market
trends for directory paper over the last three years.



| |                  
| | -----------------
| | Stand-Alone Costs

Historically, Dex West reimbursed Qwest for
services Qwest and its affiliates provided to Dex West based
upon either (1) tariffed or negotiated contract rates,
(2) market prices or (3) fully distributed costs. The
historical costs for services provided to the Predecessor by
Qwest affiliates do not reflect the expenses that we have begun
to incur as a stand-alone company. As of December 31, 2003
we completed the replacement of the

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services provided by Qwest and Qwest LEC with
services provided internally or through arrangements with third
parties. The costs we incur on a stand-alone basis are higher
than historical costs for services previously provided by Qwest
and its affiliates.




| |      
| | -----
| | Usage

Based on industry sources, overall usage of
printed yellow pages directories in the U.S. declined by a
compound annual rate of approximately 2% between 1999 and 2003.
Several factors, including the publication of competing
directories and the increased usage of Internet-based
directories, could cause usage of our printed directories to
continue to decline. Any declines in usage could limit our
ability to maintain or increase our advertising prices, cause
businesses that purchase advertising in our yellow pages
directories to reduce or discontinue those purchases and
discourage businesses that do not purchase advertising in our
yellow pages directories from doing so. Any of these factors
could affect our ability to generate revenue and have a material
adverse effect on our business.



| |                  
| | -----------------
| | On-Line Migration

Although we remain primarily focused on our
printed directories, we also market an Internet-based directory
service, DexOnline.com (formerly Qwestdex.com), to our
advertisers. We view our Internet-based directory as a
complement to our print product rather than as a stand-alone
business. We believe that any decline in the usage of our
printed directories could be offset in part by an increase in
usage of our Internet-based directory. We also believe that
increased usage of Internet-based directories will continue to
support overall usage and advertising rates in the
U.S. directory advertising industry and could provide us
with growth in advertisements. However, if we cannot provide
services over the Internet successfully or compete successfully
with other Internet-based directory services, our business could
be negatively impacted.



| |             
| | ------------
| | Bond Ratings

In anticipation of the Offering and the use of a
portion of the proceeds to reduce debt, on May 17, 2004
Standard and Poors revised the outlook on our credit ratings to
stable from negative.

On July 28, 2004, Moodys Investor
Service upgraded the credit ratings of our credit facilities,
senior notes and senior subordinated notes by two notches. The
rating upgrade does not have any immediate impact on our
financing costs.



| |            
| | -----------
| | Competition

The U.S. directory advertising industry is
competitive. There are a number of independent directory
publishers and publishers affiliated with local exchange
carriers with which we compete in one or more of the Dex West
States. For example, new competitive directories were introduced
in four of our top ten markets in 2003 compared to just one new
competitive directory in 2002.

Through our Internet-based directory, we compete
with these publishers and with other Internet sites providing
search and classified directory information. In addition, we
compete against other forms of media, including newspapers,
radio, television, the Internet, billboards and direct mail, for
business and professional advertising.

The foregoing discussion of material trends,
known facts and uncertainties should not be construed as
exhaustive or as an admission regarding the adequacy of
disclosure made by us. We disclaim any intention or obligation
to update or revise forward-looking statements, whether as a
result of new information, future events or otherwise.

Critical Accounting Policies and
Estimates

We have identified the policies below as critical
to our business operations and the understanding of our results
of operations. The effect and any associated risks related to
these policies on our business operations is

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discussed throughout Item 2 
Managements Discussion and Analysis of Financial
Condition and Results of Operations where these policies
affect our reported and expected financial results.




| |                    
| | -------------------
| | Revenue Recognition

The sale of advertising in printed directories
published by us is our primary source of revenue. We recognize
revenue ratably over the life of each directory using the
deferral and amortization method of accounting, with revenue
recognition commencing in the month of delivery. Our directories
are initially published with an estimated 12-month useful life,
although we may revise the estimate of a directory life
subsequent to its publication in order to better manage account
and production workflow as it relates to other directories
published in the same period. Because we generally have the
right to bill and collect revenue related to the extension of
directory publishing dates, a revision in the estimated life of
a given directory should not have a significant impact on our
results of operations or cash flows.



| |                
| | ---------------
| | Cost of Revenue

Direct costs related to the sales, production and
distribution of directories are recognized ratably over the life
of each directory under the deferral and amortization method of
accounting, with cost recognition commencing in the month of
delivery. Direct costs include sales commissions, graphics costs
and the costs of printing, publishing and distribution.
Revisions in the estimated useful lives of directories after
their initial publication may cause the acceleration or
deceleration of cost recognition related to the amortization of
deferred directory costs. Although we cannot predict the extent
such changes could have on future cost recognition, the movement
of book publishing dates has historically had a minimal impact
on cost recognition between periods.



| |                                                         
| | --------------------------------------------------------
| | Allowance for Doubtful Accounts and Bad
    Debt Expense

We periodically make judgments regarding the
collectibility of outstanding receivables and provide
appropriate allowances when collectibility becomes doubtful.
Although we believe our allowance for doubtful accounts
adequately reflects that portion of our receivables that are
uncollectible, we may revise our estimates in future periods
based upon new circumstances and such revisions may be material.



| |             
| | ------------
| | Income Taxes

It is our determination that it is more likely
than not that we will utilize our deferred tax assets before the
expiration of the net operating loss carryforward periods. This
determination is based upon our estimation of projected book and
taxable income and expense over the next several years. To the
extent our projections vary significantly from actual results, a
portion of our deferred tax benefits may not be realizable,
resulting in a charge to income tax expense.

Disclosure Regarding Forward-Looking
Statements

This Form 10-Q contains forward-looking
statements. These statements relate to future events or our
future financial performance, and involve known and unknown
risks, uncertainties and other factors that may cause our actual
results, levels of activity, performance or achievements to be
materially different from any future results, levels of
activity, performance or achievements expressed or implied by
these forward-looking statements. In some cases, you can
identify forward-looking statements by terminology such as
may, will, should,
expects, intends, plans,
anticipates, believes,
estimates, predicts,
potential, continue or the negative of
these terms or other comparable terminology. These statements
are only predictions. Actual events or results may differ
materially.

Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance
or achievements. These forward-looking statements are made as of
the date of this Form 10-Q and, except as required under
the federal securities laws and the rules and regulations of the
SEC, we assume no obligation to update or revise them or to
provide reasons why actual results may differ.

33



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|        |                                                               
|------- | --------------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures
    About Market Risk

Long-Term Debt

As of September 30, 2004, we had a total
outstanding debt balance of $3,014.8 million comprised of
$1,868.0 million of variable rate debt drawn under the
secured credit facilities, $385.0 million of senior notes
and $761.8 million of senior subordinated notes. The credit
facilities were made up of $830.2 million of Tranche A
term loan maturing in September 2009 and $1,037.8 million
of Tranche B term loan maturing in March 2010. Due to the
variable rate characteristics of the credit facilities, the
carrying amounts of the Tranche A term loan and the
Tranche B term loan approximated fair values.

The $385.0 million unsecured senior notes
bearing a fixed interest rate of 8 1/2% matures in August
2010. Due to changes in interest rates and market conditions
since the issuance of these fixed rate notes, the fair value of
the notes was $437.0 million at September 30, 2004.

The $761.8 million unsecured senior
subordinated notes bearing a fixed interest rate of 9 7/8%
matures in August 2013. Due to changes in interest rates and
market conditions since the issuance of these fixed rate notes,
the fair value of the notes was $895.1 million at
September 30, 2004.

Interest Rate Risk

As of September 30, 2004, we had no
borrowings outstanding under our revolving credit facility,
$830.2 million of debt outstanding under our Tranche A
term loan facility and $1,037.8 million of debt outstanding
under our Tranche B term loan facility. Interest payable on
our revolving credit facility and each of our term loan
facilities is based upon variable rates. Accordingly, our
earnings and cash flows are affected by changes in interest
rates. Assuming we had incurred this level of borrowings on
January 1, 2004 with interest payable at variable rates and
assuming a one percentage point increase in the weighted average
interest rate under these borrowings, we estimate that our
interest expense for the three months and nine months ended
September 30, 2004 would have increased by approximately
$4.7 million and $14.2 million, respectively. In
October 2004, we entered into four fixed interest rate swaps
with an aggregate notional amount of $300 million, with
applicable preset monthly fixed rates ranging from 1.901%
to 3.61%. The interest rate swaps will expire in October
2006. We do not intend to use any financial derivative
instruments for speculative purposes.






|        |                        
|------- | -----------------------
|Item 4. | Controls and Procedures

Dex Media West maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) promulgated under
the Securities Exchange Act of 1934, as amended) that are
designed to ensure that information that would be required to be
disclosed in Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the
SECs rules and forms, and that such information is
accumulated and communicated to Dex Media Wests
management, including its Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure.

As of the end of the period covered by this
report, Dex Media West carried out an evaluation, under the
supervision and with the participation of Dex Media Wests
management, including its Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and
operation of Dex Media Wests disclosure controls and
procedures. Based on the foregoing, Dex Media Wests Chief
Executive Officer and Chief Financial Officer concluded that Dex
Media Wests disclosure controls and procedures were
effective as of the end of the period covered by this report.

There have been no significant changes in Dex
Media Wests internal controls or in other factors that
could significantly affect the internal controls subsequent to
the date Dex Media West completed its evaluation.

34



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PART II.

OTHER INFORMATION






|        |                  
|------- | -----------------
|Item 1. | Legal Proceedings

From time to time, we are a party to litigation
matters arising in connection with the normal course of our
business. In many of these matters, plaintiffs allege that they
have suffered damages from errors or omissions or improper
listings contained in directories published by us. Although we
have not had notice of any such claims that we believe to be
material, any pending or future claim could have a material
adverse effect on our business.

In addition, we are exposed to defamation and
breach of privacy claims arising from our publication of
directories and our methods of collecting, processing and using
personal data. The subjects of our data and users of data that
we collect and publish could have claims against us if such data
were found to be inaccurate, or if personal data stored by us
was improperly accessed and disseminated by unauthorized
persons. Although we have not had notice of any material claims
relating to defamation or breach of privacy claims to date, we
may be party to litigation matters that could have a material
adverse effect on our business.






|        |                                                                
|------- | ---------------------------------------------------------------
|Item 2. | Unregistered Sales of Equity Securities and
    Use of Proceeds

None.






|        |                                    
|------- | -----------------------------------
|Item 3. | Defaults upon Senior
    Securities

None.






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

None.






|        |                  
|------- | -----------------
|Item 5. | Other Information

None.






|        |         
|------- | --------
|Item 6. | Exhibits

|                                                                                                                                                                                                                                                                                                                                                                                                                             |  |   |  |                                                                                                                                 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - |  | --------------------------------------------------------------------------------------------------------------------------------
|Exhibit 31.1                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  | Certification of Chief Executive Officer of Dex
    Media West LLC pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002
|Exhibit 31.2                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  | Certification of Chief Financial Officer of Dex
    Media West LLC pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002
|Exhibit 32.1                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  | Certification of Chief Executive Officer of Dex
    Media West LLC pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002
|Exhibit 32.2                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  | Certification of Chief Financial Officer of Dex
    Media West LLC pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002
|Exhibits 32.1 and 32.2 are being furnished
    solely to accompany this Report pursuant to 18 U.S.C.
    § 1350, and are not being filed for purposes of
    Section 18 of the Securities Exchange Act of 1934, as
    amended, and are not to be incorporated by references into any
    of our filings, whether made before or after the date hereof,
    regardless of any general incorporation language in such filing.

35



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SIGNATURE

Pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, Dex Media West LLC has caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



| |                   
| | ------------------
| | DEX MEDIA WEST LLC



| |     |                              
| | --- | -----------------------------
| | By: | /s/ ROBERT M. NEUMEISTER, JR.

| |                             
| | ----------------------------
| |                             
| | Robert M. Neumeister, Jr.   
| | Executive Vice President and
| | Chief Financial Officer     
| | (principal financial officer
| | and duly authorized officer)

Date: November 10, 2004

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EXHIBIT INDEX

|                                                                                                                                                                                                                                                                                                                                                                                                                             |  |   |  |                                                                                                                                 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - |  | --------------------------------------------------------------------------------------------------------------------------------
|Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   |  |                                                                                                                                 
|Number                                                                                                                                                                                                                                                                                                                                                                                                                       |  |   |  | Description                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                             |  |   |  |                                                                                                                                 
|Exhibit 31.1                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  | Certification of Chief Executive Officer of Dex
    Media West LLC pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002
|Exhibit 31.2                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  | Certification of Chief Financial Officer of Dex
    Media West LLC pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002
|Exhibit 32.1                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  | Certification of Chief Executive Officer of Dex
    Media West LLC pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002
|Exhibit 32.2                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  | Certification of Chief Financial Officer of Dex
    Media West LLC pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002
|Exhibits 32.1 and 32.2 are being furnished
    solely to accompany this Report pursuant to 18 U.S.C.
    § 1350, and are not being filed for purposes of
    Section 18 of the Securities Exchange Act of 1934, as
    amended, and are not to be incorporated by references into any
    of our filings, whether made before or after the date hereof,
    regardless of any general incorporation language in such filing.