##### 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, 2005                                           
|  
|OR
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|  
|   |  | For the transition period
    from           to                                             

Commission File Number: 001-32249





Dex Media, Inc.


(Exact name of registrant as specified in its charter)





|                                |  |                    
|------------------------------- |  | -------------------
|Delaware                        |  | 14-1855759         
|(State or other jurisdiction of |  | (IRS Employer      
|incorporation or organization)  |  | Identification No.)

198 Inverness Drive West


Englewood, Colorado


80112


(Address of principal executive offices)


(303) 784-2900


(Registrants telephone number, including area code)





þ o


o þ


o þ












---










TABLE OF CONTENTS


|                                                     |  |                                                                                                                                      |    |      |    | 
|---------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------ | -- | ---- | -- | 
|                                                     |  |                                                                                                                                      |    | Page |   
|                                                     |  |                                                                                                                                      |    | No.  |   
|                                                     |  |                                                                                                                                      |    |      |   
|PART I: FINANCIAL INFORMATION                        |  |                                                                                                                                      | 2  |     
|Item 1.                                              |  | Financial Statements                                                                                                                 |    |      | 2  | 
|                                                     |  | Condensed Consolidated Balance Sheets
    (unaudited)  September 30, 2005 and
    December 31, 2004                                 |    |      | 2  | 
|                                                     |  | Condensed Consolidated Statements of
    Operations (unaudited)  Three months and nine months
    ended September 30, 2005 and 2004 |    |      | 3  | 
|                                                     |  | Condensed Consolidated Statements of Cash
    Flows (unaudited)  Nine months ended
    September 30, 2005 and 2004                  |    |      | 4  | 
|                                                     |  | Notes to Condensed Consolidated Financial
    Statements (unaudited)                                                                 |    |      | 5  | 
|Item 2.                                              |  | Managements Discussion and Analysis
    of Financial Condition and Results of
    Operations                                        |    |      | 19 | 
|Item 3.                                              |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                                       |    |      | 36 | 
|Item 4.                                              |  | Controls and Procedures                                                                                                              |    |      | 37 | 
|                                                    
|PART II: OTHER INFORMATION                           |  |                                                                                                                                      | 38 |     
|Item 1.                                              |  | Legal Proceedings                                                                                                                    |    |      | 38 | 
|Item 2.                                              |  | Unregistered Sales of Equity Securities and
    Use of Proceeds                                                                      |    |      | 38 | 
|Item 3.                                              |  | Defaults Upon Senior Securities                                                                                                      |    |      | 38 | 
|Item 4.                                              |  | Submission of Matters to a Vote of Security
    Holders                                                                              |    |      | 38 | 
|Item 5.                                              |  | Other Information                                                                                                                    |    |      | 38 | 
|Item 6.                                              |  | Exhibits                                                                                                                             |    |      | 38 | 
|Signature                                            |  |                                                                                                                                      | 39 |     
|Certification of CEO Pursuant to Section 302        
|Certification of CFO Pursuant to Section 302        
|Certification of CEO and CFO Purusant to Section 906



1



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##### Table of Contents






PART I.


FINANCIAL INFORMATION







|        |                     
|------- | --------------------
|Item I. | Financial Statements

DEX MEDIA, INC. AND SUBSIDIARIES





CONDENSED CONSOLIDATED BALANCE SHEETS


(Dollars in thousands, except share data)


(Unaudited)


|                                                                                                                                                                                              |                                        |                            |                                            |         |              |           |           |         |           |           | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------- | -------------------------- | ------------------------------------------ | ------- | ------------ | --------- | --------- | ------- | --------- | --------- | 
|                                                                                                                                                                                              |                                        | As of                      |                                            |         | As of        |          
|                                                                                                                                                                                              |                                        | September 30,              |                                            |         | December 31, |          
|                                                                                                                                                                                              |                                        | 2005                       |                                            |         | 2004         |          
|                                                                                                                                                                                              |                                        |                            |                                            |         |              |          
|ASSETS                                                                                                                                                                                       
|Current assets:                                                                                                                                                                               |                                        |                            |                                            |         |              |           |           |        
|                                                                                                                                                                                              | Cash and cash equivalents              |                            | $                                          | 217     |              |           | $         | 9,234   |          
|                                                                                                                                                                                              | Accounts receivable, net               |                            |                                            | 118,518 |              |           |           | 104,232 |          
|                                                                                                                                                                                              | Deferred directory costs               |                            |                                            | 301,710 |              |           |           | 291,237 |          
|                                                                                                                                                                                              | Current deferred income taxes          |                            |                                            | 21,276  |              |           |           | 13,438  |          
|                                                                                                                                                                                              | Other current assets                   |                            |                                            | 15,875  |              |           |           | 13,102  |          
|                                                                                                                                                                                              |                                        |                            |                                            |         |              |          
|                                                                                                                                                                                              |                                        | Total current assets       |                                            |         | 457,596      |           |           |         | 431,243   |          
|Property, plant and equipment, net                                                                                                                                                            |                                        |                            | 104,208                                    |         |              |           | 101,471   |        
|Goodwill                                                                                                                                                                                      |                                        |                            | 3,081,446                                  |         |              |           | 3,081,446 |        
|Intangible assets, net                                                                                                                                                                        |                                        |                            | 2,774,383                                  |         |              |           | 3,033,659 |        
|Deferred income taxes                                                                                                                                                                         |                                        |                            | 44,205                                     |         |              |           | 85,149    |        
|Deferred financing costs                                                                                                                                                                      |                                        |                            | 117,684                                    |         |              |           | 142,182   |        
|Other assets                                                                                                                                                                                  |                                        |                            | 3,000                                      |         |              |           | 2,815     |        
|                                                                                                                                                                                              |                                        |                            |                                            |         |              |          
|                                                                                                                                                                                              |                                        | Total Assets               |                                            | $       | 6,582,522    |           |           | $       | 6,877,965 |          
|                                                                                                                                                                                              |                                        |                            |                                            |         |              |          
|                                                                                                                                                                                             
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                         
|Current liabilities:                                                                                                                                                                          |                                        |                            |                                            |         |              |           |           |        
|                                                                                                                                                                                              | Accounts payable                       |                            | $                                          | 50,756  |              |           | $         | 48,410  |          
|                                                                                                                                                                                              | Employee compensation                  |                            |                                            | 25,891  |              |           |           | 36,432  |          
|                                                                                                                                                                                              | Common stock dividend payable          |                            |                                            | 13,570  |              |           |           | 13,528  |          
|                                                                                                                                                                                              | Deferred revenue and customer deposits |                            |                                            | 213,557 |              |           |           | 207,655 |          
|                                                                                                                                                                                              | Accrued interest payable               |                            |                                            | 74,677  |              |           |           | 63,202  |          
|                                                                                                                                                                                              | Current portion of long-term debt      |                            |                                            | 244,327 |              |           |           | 189,534 |          
|                                                                                                                                                                                              | Other accrued liabilities              |                            |                                            | 9,728   |              |           |           | 18,563  |          
|                                                                                                                                                                                              |                                        |                            |                                            |         |              |          
|                                                                                                                                                                                              |                                        | Total current liabilities  |                                            |         | 632,506      |           |           |         | 577,324   |          
|Long-term debt                                                                                                                                                                                |                                        |                            | 5,163,961                                  |         |              |           | 5,537,848 |        
|Post-retirement obligations                                                                                                                                                                   |                                        |                            | 91,270                                     |         |              |           | 81,095    |        
|Other liabilities                                                                                                                                                                             |                                        |                            | 1,278                                      |         |              |           | 1,163     |        
|                                                                                                                                                                                              |                                        |                            |                                            |         |              |          
|                                                                                                                                                                                              |                                        | Total Liabilities          |                                            |         | 5,889,015    |           |           |         | 6,197,430 |          
|                                                                                                                                                                                              |                                        |                            |                                            |         |              |          
|Commitments and contingencies (Note 10)                                                                                                                                                       |                                        |                            |                                            |         |              |           |           |        
|Stockholders Equity:                                                                                                                                                                         |                                        |                            |                                            |         |              |           |           |        
|Series A Junior Participating Preferred Stock,
    $0.01 par value, 200,000 shares authorized                                                                                                 |                                        |                            |                                           |         |              |           |          |        
|Common stock, $0.01 par value, 700 million shares
    authorized, 150,482,492 and 150,281,662 shares issued and
    outstanding at September 30, 2005 and December 31,
    2004, respectively |                                        |                            | 1,505                                      |         |              |           | 1,503     |        
|Additional paid-in capital                                                                                                                                                                    |                                        |                            | 795,369                                    |         |              |           | 833,736   |        
|Accumulated deficit                                                                                                                                                                           |                                        |                            | (104,401                                   | )       |              |           | (153,916  | )      
|Accumulated other comprehensive gain (loss)                                                                                                                                                   |                                        |                            | 1,034                                      |         |              |           | (788      | )      
|                                                                                                                                                                                              |                                        |                            |                                            |         |              |          
|                                                                                                                                                                                              |                                        | Total Stockholders Equity |                                            |         | 693,507      |           |           |         | 680,535   |          
|                                                                                                                                                                                              |                                        |                            |                                            |         |              |          
|                                                                                                                                                                                              |                                        |                            | Total Liabilities and Stockholders Equity |         | $            | 6,582,522 |           |         | $         | 6,877,965 | 
|                                                                                                                                                                                              |                                        |                            |                                            |         |              |          



2



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##### Table of Contents



DEX MEDIA, INC. AND SUBSIDIARIES





CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(Dollars in thousands, except per share data)


(Unaudited)


|                                       |                                                          |                                   |         |         |                   |   |         |         |         |   |           |         |         |   |           |         |         |  
|-------------------------------------- | -------------------------------------------------------- | --------------------------------- | ------- | ------- | ----------------- | - | ------- | ------- | ------- | - | --------- | ------- | ------- | - | --------- | ------- | ------- | -
|                                       |                                                          | Three Months Ended                |         |         | Nine Months Ended |  
|                                       |                                                          | September 30,                     |         |         | September 30,     |  
|                                       |                                                          |                                   |         |         |                   |  
|                                       |                                                          | 2005                              |         |         | 2004              |   |         | 2005    |         |   | 2004      |        
|                                       |                                                          |                                   |         |         |                   |   |         |         |         |   |           |        
|Revenue                                |                                                          | $                                 | 418,349 |         |                   | $ | 404,808 |         |         | $ | 1,244,430 |         |         | $ | 1,190,216 |        
|Operating expenses:                    |                                                          |                                   |         |         |                   |   |         |         |         |   |           |         |         |   |           |        
|                                       | Cost of revenue, excluding depreciation and amortization |                                   |         | 124,907 |                   |   |         | 123,520 |         |   |           | 373,208 |         |   |           | 363,905 |        
|                                       | General and administrative expense                       |                                   |         | 47,117  |                   |   |         | 51,529  |         |   |           | 137,741 |         |   |           | 134,552 |        
|                                       | Bad debt expense                                         |                                   |         | 15,948  |                   |   |         | 10,475  |         |   |           | 38,840  |         |   |           | 33,635  |        
|                                       | Termination of annual advisory fees                      |                                   |         |        |                   |   |         | 20,000  |         |   |           |        |         |   |           | 20,000  |        
|                                       | Depreciation and amortization expense                    |                                   |         | 9,006   |                   |   |         | 8,604   |         |   |           | 23,145  |         |   |           | 22,318  |        
|                                       | Amortization of intangibles                              |                                   |         | 86,425  |                   |   |         | 103,110 |         |   |           | 259,276 |         |   |           | 309,331 |        
|                                       |                                                          |                                   |         |         |                   |   |         |         |         |   |           |        
|                                       |                                                          | Total operating expenses          |         |         | 283,403           |   |         |         | 317,238 |   |           |         | 832,210 |   |           |         | 883,741 |  
|                                       |                                                          |                                   |         |         |                   |   |         |         |         |   |           |        
|                                       |                                                          | Operating income                  |         |         | 134,946           |   |         |         | 87,570  |   |           |         | 412,220 |   |           |         | 306,475 |  
|Other (income) expense:                |                                                          |                                   |         |         |                   |   |         |         |         |   |           |         |         |   |           |        
|                                       | Interest income                                          |                                   |         | (141    | )                 |   |         | (357    | )       |   |           | (450    | )       |   |           | (529    | )      
|                                       | Interest expense                                         |                                   |         | 109,430 |                   |   |         | 144,635 |         |   |           | 332,556 |         |   |           | 387,255 |        
|                                       | Other expense (income), net                              |                                   |         | 38      |                   |   |         | 18      |         |   |           | (1,357  | )       |   |           | 60      |        
|                                       |                                                          |                                   |         |         |                   |   |         |         |         |   |           |        
|                                       |                                                          | Income (loss) before income taxes |         |         | 25,619            |   |         |         | (56,726 | ) |           |         | 81,471  |   |           |         | (80,311 | )
|Income tax provision (benefit)         |                                                          |                                   | 10,051  |         |                   |   | (23,061 | )       |         |   | 31,956    |         |         |   | (32,046   | )      
|                                       |                                                          |                                   |         |         |                   |   |         |         |         |   |           |        
|                                       |                                                          | Net income (loss)                 |         | $       | 15,568            |   |         | $       | (33,665 | ) |           | $       | 49,515  |   |           | $       | (48,265 | )
|                                       |                                                          |                                   |         |         |                   |   |         |         |         |   |           |        
|Basic income (loss) per common share   |                                                          | $                                 | 0.10    |         |                   | $ | (0.23   | )       |         | $ | 0.33      |         |         | $ | (0.39     | )      
|Diluted income (loss) per common share |                                                          |                                   | 0.10    |         |                   |   | (0.23   | )       |         |   | 0.32      |         |         |   | (0.39     | )      



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DEX MEDIA, INC. AND SUBSIDIARIES





CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(Dollars in thousands)


(Unaudited)


|                                    |                                                                   |                                              |                                        |                                       |         |         |          |          |         |         |          |  
|----------------------------------- | ----------------------------------------------------------------- | -------------------------------------------- | -------------------------------------- | ------------------------------------- | ------- | ------- | -------- | -------- | ------- | ------- | -------- | -
|                                    |                                                                   | Nine Months Ended                            |                                       
|                                    |                                                                   | September 30,                                |                                       
|                                    |                                                                   |                                              |                                       
|                                    |                                                                   | 2005                                         |                                        |                                       | 2004    |        
|                                    |                                                                   |                                              |                                        |                                       |         |        
|Operating activities:               |                                                                   |                                              |                                        |                                       |         |         |          |         
|                                    | Net income (loss)                                                 |                                              | $                                      | 49,515                                |         |         | $        | (48,265  | )      
|                                    | Adjustments to net income (loss):                                 |                                              |                                        |                                       |         |         |          |          |        
|                                    |                                                                   | Bad debt expense                             |                                        |                                       | 38,840  |         |          |          | 33,635  |        
|                                    |                                                                   | Depreciation and amortization expense        |                                        |                                       | 23,145  |         |          |          | 22,318  |        
|                                    |                                                                   | Amortization of intangibles                  |                                        |                                       | 259,276 |         |          |          | 309,331 |        
|                                    |                                                                   | Amortization of deferred financing costs     |                                        |                                       | 28,306  |         |          |          | 46,331  |        
|                                    |                                                                   | Accretion on discount notes                  |                                        |                                       | 35,836  |         |          |          | 30,636  |        
|                                    |                                                                   | Stock-based compensation expense             |                                        |                                       | 1,649   |         |          |          | 787     |        
|                                    |                                                                   | Loss on disposition of assets                |                                        |                                       | 113     |         |          |          | 9       |        
|                                    |                                                                   | Deferred tax provision (benefit)             |                                        |                                       | 31,956  |         |          |          | (32,046 | )      
|                                    |                                                                   | Changes in operating assets and liabilities: |                                        |                                       |         |         |          |          |         |        
|                                    |                                                                   |                                              | Accounts receivable                    |                                       |         | (53,126 | )        |          |         | (20,350 | )       
|                                    |                                                                   |                                              | Deferred directory costs               |                                       |         | (10,473 | )        |          |         | (19,240 | )       
|                                    |                                                                   |                                              | Other current assets                   |                                       |         | (2,110  | )        |          |         | (5,249  | )       
|                                    |                                                                   |                                              | Other long-term assets                 |                                       |         | 775     |          |          |         | 1,585   |         
|                                    |                                                                   |                                              | Accounts payable and other liabilities |                                       |         | (16,487 | )        |          |         | (11,521 | )       
|                                    |                                                                   |                                              | Accrued interest                       |                                       |         | 11,475  |          |          |         | (2,946  | )       
|                                    |                                                                   |                                              | Deferred revenue and customer deposits |                                       |         | 5,902   |          |          |         | 44,664  |         
|                                    |                                                                   |                                              | Other long-term liabilities            |                                       |         | 920     |          |          |         | (4,124  | )       
|                                    |                                                                   |                                              | Employee benefit plan obligations      |                                       |         | 10,175  |          |          |         | 8,650   |         
|                                    |                                                                   |                                              |                                        |                                       |         |        
|                                    |                                                                   |                                              |                                        | Cash provided by operating activities |         |         | 415,687  |          |         |         | 354,205  |  
|                                    |                                                                   |                                              |                                        |                                       |         |        
|Investing activities:               |                                                                   |                                              |                                        |                                       |         |         |          |         
|                                    | Expenditures for property, plant and equipment                    |                                              |                                        | (3,950                                | )       |         |          | (12,590  | )      
|                                    | Capitalized software development costs                            |                                              |                                        | (22,045                               | )       |         |          | (35,443  | )      
|                                    | Working capital adjustment related to the acquisition of Dex West |                                              |                                        |                                      |         |         |          | 5,185    |        
|                                    |                                                                   |                                              |                                        |                                       |         |        
|                                    |                                                                   |                                              |                                        | Cash used for investing activities    |         |         | (25,995  | )        |         |         | (42,848  | )
|                                    |                                                                   |                                              |                                        |                                       |         |        
|Financing activities:               |                                                                   |                                              |                                        |                                       |         |         |          |         
|                                    | Proceeds from borrowings on revolving credit facilities           |                                              |                                        | 231,000                               |         |         |          | 41,000   |        
|                                    | Repayments of borrowings on revolving credit facilities           |                                              |                                        | (199,000                              | )       |         |          | (41,000  | )      
|                                    | Proceeds from issuance of long-term debt                          |                                              |                                        |                                      |         |         |          | 250,476  |        
|                                    | Payments on long-term debt                                        |                                              |                                        | (386,930                              | )       |         |          | (539,389 | )      
|                                    | Exercise of employee stock options                                |                                              |                                        | 619                                   |         |         |          | 4,426    |        
|                                    | Payment of financing costs                                        |                                              |                                        | (3,808                                | )       |         |          | (6,030   | )      
|                                    | Contribution by stockholders                                      |                                              |                                        |                                      |         |         |          | 320      |        
|                                    | Distributions to stockholders                                     |                                              |                                        |                                      |         |         |          | (250,520 | )      
|                                    | Common stock dividends paid                                       |                                              |                                        | (40,590                               | )       |         |          |         |        
|                                    | Redemption of preferred stock                                     |                                              |                                        |                                      |         |         |          | (128,483 | )      
|                                    | Issuance of common stock                                          |                                              |                                        |                                      |         |         |          | 375,000  |        
|                                    | Offering costs                                                    |                                              |                                        |                                      |         |         |          | (20,795  | )      
|                                    |                                                                   |                                              |                                        |                                       |         |        
|                                    |                                                                   |                                              |                                        | Cash used for financing activities    |         |         | (398,709 | )        |         |         | (314,995 | )
|                                    |                                                                   |                                              |                                        |                                       |         |        
|Cash and cash equivalents:          |                                                                   |                                              |                                        |                                       |         |         |          |         
|                                    | Decrease                                                          |                                              |                                        | (9,017                                | )       |         |          | (3,638   | )      
|                                    | Beginning balance                                                 |                                              |                                        | 9,234                                 |         |         |          | 7,416    |        
|                                    |                                                                   |                                              |                                        |                                       |         |        
|                                    |                                                                   |                                              |                                        | Ending balance                        |         | $       | 217      |          |         | $       | 3,778    |  
|                                    |                                                                   |                                              |                                        |                                       |         |        
|Supplemental cash flow disclosures: |                                                                   |                                              |                                        |                                       |         |         |          |         
|                                    | Interest paid                                                     |                                              | $                                      | 261,007                               |         |         | $        | 313,513  |        



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##### Table of Contents



DEX MEDIA, INC. AND SUBSIDIARIES





NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




|   |                        
|-- | -----------------------
|1. | Description of Business



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











|    |           
|--- | ----------
|(b) | Operations





|    |                                    
|--- | -----------------------------------
|(c) | Dex Medias Initial Public Offering



5



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##### Table of Contents



DEX MEDIA, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                      
|-- | ---------------------
|2. | Basis of Presentation



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







|    |                  
|--- | -----------------
|(b) | Reclassifications





|   |                                           
|-- | ------------------------------------------
|3. | Summary of Significant Accounting Policies



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





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



6



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##### Table of Contents



DEX MEDIA, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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





Accounting for
Advertising Barter Transactions.


Revenue
Arrangements with Multiple Deliverables.




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





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##### Table of Contents



DEX MEDIA, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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

Accounting for
Stock Issued to Employees, Accounting for
Stock-Based Compensation,


|                                        |                                                                                                                                                                                |                    |   |        |                   |  |   |         |   |  |      |        |   |  |   |         |  
|--------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------ | - | ------ | ----------------- |  | - | ------- | - |  | ---- | ------ | - |  | - | ------- | -
|                                        |                                                                                                                                                                                | Three Months Ended |   |        | Nine Months Ended | 
|                                        |                                                                                                                                                                                | September 30,      |   |        | September 30,     | 
|                                        |                                                                                                                                                                                |                    |   |        |                   | 
|                                        |                                                                                                                                                                                | 2005               |   |        | 2004              |  |   | 2005    |   |  | 2004 |       
|                                        |                                                                                                                                                                                |                    |   |        |                   |  |   |         |   |  |      |       
|Net Income (loss):                      |                                                                                                                                                                                |                    |   |        |                   |  |   |         |   |  |      |        |   |  |   |        
|                                        | As reported                                                                                                                                                                    |                    | $ | 15,568 |                   |  | $ | (33,665 | ) |  | $    | 49,515 |   |  | $ | (48,265 | )
|                                        | Add: Stock-based employee compensation expense included in
    reported net income (loss), net of related tax effects                                                          |                    |   | 276    |                   |  |   | 286     |   |  |      | 834    |   |  |   | 477     |  
|                                        | Deduct: Stock-based employee compensation expense determined
    under minimum value or fair value based method, as applicable,
    for all awards, net of related tax effects |                    |   | (431   | )                 |  |   | (414    | ) |  |      | (1,312 | ) |  |   | (838    | )
|                                        |                                                                                                                                                                                |                    |   |        |                   |  |   |         |   |  |      |       
|                                        | Pro forma                                                                                                                                                                      |                    | $ | 15,413 |                   |  | $ | (33,793 | ) |  | $    | 49,037 |   |  | $ | (48,626 | )
|                                        |                                                                                                                                                                                |                    |   |        |                   |  |   |         |   |  |      |       
|Basic income (loss) per common share:   |                                                                                                                                                                                |                    |   |        |                   |  |   |         |   |  |      |        |   |  |   |        
|                                        | As reported                                                                                                                                                                    |                    | $ | 0.10   |                   |  | $ | (0.23   | ) |  | $    | 0.33   |   |  | $ | (0.39   | )
|                                        | Pro forma                                                                                                                                                                      |                    |   | 0.10   |                   |  |   | (0.23   | ) |  |      | 0.33   |   |  |   | (0.39   | )
|Diluted income (loss) per common share: |                                                                                                                                                                                |                    |   |        |                   |  |   |         |   |  |      |        |   |  |   |        
|                                        | As reported                                                                                                                                                                    |                    | $ | 0.10   |                   |  | $ | (0.23   | ) |  | $    | 0.32   |   |  | $ | (0.39   | )
|                                        | Pro forma                                                                                                                                                                      |                    |   | 0.10   |                   |  |   | (0.23   | ) |  |      | 0.32   |   |  |   | (0.39   | )



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



8



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##### Table of Contents



DEX MEDIA, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                  
|--- | -----------------
|(g) | Computer Software





|    |                         
|--- | ------------------------
|(h) | New Accounting Standards

Share-based
Payment. Share-based
Payment




Accounting Changes and Error Corrections  a
Replacement of APB Opinion No. 20 and FASB Statement
No. 3.


9



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##### Table of Contents



DEX MEDIA, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                               
|-- | ------------------------------
|4. | Goodwill and Intangible Assets



|                                  |        |                          |           |           |              |   |          |          |   |   |           |           |  |  |             |     | 
|--------------------------------- | ------ | ------------------------ | --------- | --------- | ------------ | - | -------- | -------- | - | - | --------- | --------- |  |  | ----------- | --- | 
|                                  |        | As of September 30, 2005 |          
|                                  |        |                          |          
|                                  |        | Gross                    |           |           |             
|                                  |        | Carrying                 |           |           | Accumulated  |   |          | Net Book |   |   |          
|Intangible Assets                 |        | Value                    |           |           | Amortization |   |          | Value    |   |   | Life      |          
|                                  |        |                          |           |           |              |   |          |          |   |   |           |          
|Customer relationships  local    |        | $                        | 1,787,000 |           |              | $ | (725,974 | )        |   | $ | 1,061,026 |           |  |  | 20 years    | (1)
|Customer relationships  national |        |                          | 493,000   |           |              |   | (151,085 | )        |   |   | 341,915   |           |  |  | 25 years    | (1)
|Non-compete/publishing agreements |        |                          | 610,000   |           |              |   | (37,067  | )        |   |   | 572,933   |           |  |  | 39-40 years |    
|Dex Trademark                     |        |                          | 696,000   |           |              |   |         |          |   |   | 696,000   |           |  |  | Indefinite  |    
|Qwest Dex Trademark agreement     |        |                          | 133,000   |           |              |   | (71,287  | )        |   |   | 61,713    |           |  |  | 4-5 years   |    
|Advertising agreement             |        |                          | 49,000    |           |              |   | (8,204   | )        |   |   | 40,796    |           |  |  | 14-15 years |    
|                                  |        |                          |           |           |              |   |          |          |   |   |           |          
|                                  | Totals |                          | $         | 3,768,000 |              |   | $        | (993,617 | ) |   | $         | 2,774,383 |  |  |             |     | 
|                                  |        |                          |           |           |              |   |          |          |   |   |           |          

|                                  |        |                         |           |           |              |   |          |          |   |   |           |           |  |  |             |     | 
|--------------------------------- | ------ | ----------------------- | --------- | --------- | ------------ | - | -------- | -------- | - | - | --------- | --------- |  |  | ----------- | --- | 
|                                  |        | As of December 31, 2004 |          
|                                  |        |                         |          
|                                  |        | Gross                   |           |           |             
|                                  |        | Carrying                |           |           | Accumulated  |   |          | Net Book |   |   |          
|Intangible Assets                 |        | Value                   |           |           | Amortization |   |          | Value    |   |   | Life      |          
|                                  |        |                         |           |           |              |   |          |          |   |   |           |          
|Customer relationships  local    |        | $                       | 1,787,000 |           |              | $ | (542,968 | )        |   | $ | 1,244,032 |           |  |  | 20 years    | (1)
|Customer relationships  national |        |                         | 493,000   |           |              |   | (110,722 | )        |   |   | 382,278   |           |  |  | 25 years    | (1)
|Non-compete/publishing agreements |        |                         | 610,000   |           |              |   | (25,488  | )        |   |   | 584,512   |           |  |  | 39-40 years |    
|Dex Trademark                     |        |                         | 696,000   |           |              |   |         |          |   |   | 696,000   |           |  |  | Indefinite  |    
|Qwest Dex Trademark agreement     |        |                         | 133,000   |           |              |   | (49,480  | )        |   |   | 83,520    |           |  |  | 4-5 years   |    
|Advertising agreement             |        |                         | 49,000    |           |              |   | (5,683   | )        |   |   | 43,317    |           |  |  | 14-15 years |    
|                                  |        |                         |           |           |              |   |          |          |   |   |           |          
|                                  | Totals |                         | $         | 3,768,000 |              |   | $        | (734,341 | ) |   | $         | 3,033,659 |  |  |             |     | 
|                                  |        |                         |           |           |              |   |          |          |   |   |           |          






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



10



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##### Table of Contents



DEX MEDIA, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |               
|-- | --------------
|5. | Long-Term Debt



|                                                                                                                               |                                                                                                                                                                                                                                                                         |               |           |         |              |   |           |         | 
|------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- | --------- | ------- | ------------ | - | --------- | ------- | 
|                                                                                                                               |                                                                                                                                                                                                                                                                         | September 30, |           |         | December 31, |  
|                                                                                                                               |                                                                                                                                                                                                                                                                         | 2005          |           |         | 2004         |  
|                                                                                                                               |                                                                                                                                                                                                                                                                         |               |           |         |              |  
|Dex Media East Notes Payable to Banks (equal right of
    payment):                                                            |                                                                                                                                                                                                                                                                         |               |           |         |              |   |           |        
|                                                                                                                               | Notes payable to banks, Tranche A term loan, bearing
    interest at adjusted London Interbank Offering Rate
    (LIBOR) plus the current applicable interest spread
    of 1.25% (weighted average rate of 5.03% at September 30,
    2005)                          |               | $         | 339,602 |              |   | $         | 474,654 | 
|                                                                                                                               | Notes payable to banks, Tranche B term loan, bearing
    interest at adjusted LIBOR plus the current applicable interest
    spread of 1.75% (weighted average rate of 5.48% at
    September 30, 2005)                                                                 |               |           | 438,081 |              |   |           | 494,630 | 
|                                                                                                                               | Revolving loan bearing interest at Alternative Base Rate
    (ABR) plus the current applicable spread of 0.25%
    and at adjusted LIBOR plus the current applicable interest
    spread of 1.25% (weighted average interest rate of 6.18% at
    September 30, 2005) |               |           | 14,000  |              |   |           |        | 
|Dex Media West Notes Payable to Banks (equal right of
    payment):                                                            |                                                                                                                                                                                                                                                                         |               |           |         |              |   |           |        
|                                                                                                                               | Notes payable to banks, Tranche A term loan, bearing
    interest at adjusted LIBOR plus the current applicable interest
    spread of 1.25% (weighted average of 5.02% at September 30,
    2005)                                                                      |               |           | 376,227 |              |   |           | 492,848 | 
|                                                                                                                               | Notes payable to banks, Tranche B term loan, bearing
    interest at adjusted LIBOR plus the current applicable interest
    spread of 1.75% (weighted average of 5.47% at September 30,
    2005)                                                                      |               |           | 902,444 |              |   |           | 981,152 | 
|                                                                                                                               | Revolving loan bearing interest at ABR plus the current
    applicable spread of 0.25% and at adjusted LIBOR plus the
    current applicable interest spread of 1.25% (weighted average
    interest rate of 5.57% at September 30, 2005)                               |               |           | 18,000  |              |   |           |        | 
|Dex Media East Unsecured Notes Payable (in descending
    order of right of payment):                                          |                                                                                                                                                                                                                                                                         |               |           |         |              |   |           |        
|                                                                                                                               | Unsecured senior notes payable, due in November 2009, bearing
    interest at 9.875%                                                                                                                                                                                    |               |           | 450,000 |              |   |           | 450,000 | 
|                                                                                                                               | Unsecured senior subordinated notes payable, due in November
    2012, bearing interest at 12.125%                                                                                                                                                                      |               |           | 341,250 |              |   |           | 341,250 | 
|Dex Media West Unsecured Notes Payable (in descending
    order of right of payment; senior notes equal right of
    payment): |                                                                                                                                                                                                                                                                         |               |           |         |              |   |           |        
|                                                                                                                               | Unsecured senior notes payable, due August 2010, bearing
    interest at 8.5%                                                                                                                                                                                           |               |           | 385,000 |              |   |           | 385,000 | 
|                                                                                                                               | Unsecured senior notes payable, due November 2011, bearing
    interest at 5.875%                                                                                                                                                                                       |               |           | 300,000 |              |   |           | 300,000 | 
|                                                                                                                               | Unsecured senior subordinated notes payable, due August 2013,
    bearing interest at 9.875%                                                                                                                                                                            |               |           | 761,800 |              |   |           | 761,800 | 
|Dex Media Unsecured Notes Payable (equal right of
    payment):                                                                |                                                                                                                                                                                                                                                                         |               |           |         |              |   |           |        
|                                                                                                                               | Unsecured senior notes payable, due November 2013, bearing
    interest at 8%                                                                                                                                                                                           |               |           | 500,000 |              |   |           | 500,000 | 
|                                                                                                                               | Unsecured senior discount notes payable, due November 2013,
    bearing interest at 9%                                                                                                                                                                                  |               |           | 581,884 |              |   |           | 546,048 | 
|                                                                                                                               |                                                                                                                                                                                                                                                                         |               |           |         |              |  
|                                                                                                                               |                                                                                                                                                                                                                                                                         |               | 5,408,288 |         |              |   | 5,727,382 |        
|Less: current portion of long-term debt                                                                                        |                                                                                                                                                                                                                                                                         |               | (244,327  | )       |              |   | (189,534  | )      
|                                                                                                                               |                                                                                                                                                                                                                                                                         |               |           |         |              |  
|                                                                                                                               |                                                                                                                                                                                                                                                                         | $             | 5,163,961 |         |              | $ | 5,537,848 |        
|                                                                                                                               |                                                                                                                                                                                                                                                                         |               |           |         |              |  

11



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##### Table of Contents



DEX MEDIA, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|   |                                              
|-- | ---------------------------------------------
|6. | Derivative Instruments and Hedging Activities











12



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##### Table of Contents



DEX MEDIA, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|   |                            
|-- | ---------------------------
|7. | Comprehensive Income (Loss)





|                                                 |  |                    |        |  |                   |   |         |      |  |   |        |  |  |   |         |  
|------------------------------------------------ |  | ------------------ | ------ |  | ----------------- | - | ------- | ---- |  | - | ------ |  |  | - | ------- | -
|                                                 |  | Three Months Ended |        |  | Nine Months Ended |  
|                                                 |  | September 30,      |        |  | September 30,     |  
|                                                 |  |                    |        |  |                   |  
|                                                 |  | 2005               |        |  | 2004              |   |         | 2005 |  |   | 2004   | 
|                                                 |  |                    |        |  |                   |   |         |      |  |   |        | 
|Net income (loss)                                |  | $                  | 15,568 |  |                   | $ | (33,665 | )    |  | $ | 49,515 |  |  | $ | (48,265 | )
|Changes in fair value of derivatives, net of tax |  |                    | 1,087  |  |                   |   | (792    | )    |  |   | 1,822  |  |  |   | 2,216   |  
|                                                 |  |                    |        |  |                   |   |         |      |  |   |        | 
|Comprehensive income (loss)                      |  | $                  | 16,655 |  |                   | $ | (34,457 | )    |  | $ | 51,337 |  |  | $ | (46,049 | )
|                                                 |  |                    |        |  |                   |   |         |      |  |   |        | 



|   |                     
|-- | --------------------
|8. | Stockholders Equity



|    |                
|--- | ---------------
|(a) | Preferred stock





|    |             
|--- | ------------
|(b) | Common stock





|    |          
|--- | ---------
|(c) | Dividends



13



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##### Table of Contents



DEX MEDIA, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                                                 
|--- | ------------------------------------------------
|(d) | Basic and Diluted Income (Loss) Per Common Share

|                                                 |  |                                               |        |  |                   |   |         |      |  |   |        |  |  |   |         |  
|------------------------------------------------ |  | --------------------------------------------- | ------ |  | ----------------- | - | ------- | ---- |  | - | ------ |  |  | - | ------- | -
|                                                 |  | Three Months Ended                            |        |  | Nine Months Ended |  
|                                                 |  | September 30,                                 |        |  | September 30,     |  
|                                                 |  |                                               |        |  |                   |  
|                                                 |  | 2005                                          |        |  | 2004              |   |         | 2005 |  |   | 2004   | 
|                                                 |  |                                               |        |  |                   |   |         |      |  |   |        | 
|                                                 |  | (Dollars in thousands, except per share data) |       
|Net income (loss)                                |  | $                                             | 15,568 |  |                   | $ | (33,665 | )    |  | $ | 49,515 |  |  | $ | (48,265 | )
|Dividend accumulated on Series A Preferred Stock |  |                                               |       |  |                   |   | (462    | )    |  |   |       |  |  |   | (3,929  | )
|                                                 |  |                                               |        |  |                   |   |         |      |  |   |        | 
|Income (loss) available to common stockholders   |  | $                                             | 15,568 |  |                   | $ | (34,127 | )    |  | $ | 49,515 |  |  | $ | (52,194 | )
|                                                 |  |                                               |        |  |                   |   |         |      |  |   |        | 
|Basic income (loss) per share                    |  | $                                             | 0.10   |  |                   | $ | (0.23   | )    |  | $ | 0.33   |  |  | $ | (0.39   | )
|Diluted income (loss) per share                  |  |                                               | 0.10   |  |                   |   | (0.23   | )    |  |   | 0.32   |  |  |   | (0.39   | )



|                                                                                                                        |  |                    |             |  |                   |  |             |      |  |  |             |  |  |  |             | 
|----------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- |  | ----------------- |  | ----------- | ---- |  |  | ----------- |  |  |  | ----------- | 
|                                                                                                                        |  | Three Months Ended |             |  | Nine Months Ended | 
|                                                                                                                        |  | September 30,      |             |  | September 30,     | 
|                                                                                                                        |  |                    |             |  |                   | 
|                                                                                                                        |  | 2005               |             |  | 2004              |  |             | 2005 |  |  | 2004        | 
|                                                                                                                        |  |                    |             |  |                   |  |             |      |  |  |             | 
|Denominator for basic net income (loss) per common
    share  weighted-average common shares outstanding               |  |                    | 150,405,527 |  |                   |  | 145,776,513 |      |  |  | 150,358,717 |  |  |  | 135,341,843 | 
|Dilutive impact of options and unvested restricted stock
    outstanding                                                |  |                    | 2,208,941   |  |                   |  |            |      |  |  | 2,135,658   |  |  |  |            | 
|                                                                                                                        |  |                    |             |  |                   |  |             |      |  |  |             | 
|Denominator for diluted net income (loss) per common
    share  weighted-average diluted common shares
    outstanding |  |                    | 152,614,468 |  |                   |  | 145,776,513 |      |  |  | 152,494,375 |  |  |  | 135,341,843 | 
|                                                                                                                        |  |                    |             |  |                   |  |             |      |  |  |             | 



14



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##### Table of Contents



DEX MEDIA, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                   
|--- | ------------------
|(e) | Stock-Based Awards







|   |                       
|-- | ----------------------
|9. | Employee Benefit Plans



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





15



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##### Table of Contents



DEX MEDIA, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                                                   
|--- | ------------------------------------------------------------------
|(b) | Components of Net Periodic Benefit Cost (dollars in
    thousands)

|                                    |  |                                  |        |   |                 |   |       |         |  |   |                 |   |  |   |       |  
|----------------------------------- |  | -------------------------------- | ------ | - | --------------- | - | ----- | ------- |  | - | --------------- | - |  | - | ----- | -
|                                    |  | Three Months Ended September 30, |       
|                                    |  |                                  |       
|                                    |  | 2005                             |        |   | 2004            |  
|                                    |  |                                  |        |   |                 |  
|                                    |  | Pension                          |        |   | Post-Retirement |   |       | Pension |  |   | Post-Retirement |  
|                                    |  | Benefit                          |        |   | Benefits        |   |       | Benefit |  |   | Benefits        |  
|                                    |  |                                  |        |   |                 |   |       |         |  |   |                 |  
|Service cost                        |  | $                                | 2,395  |   |                 | $ | 584   |         |  | $ | 2,725           |   |  | $ | 625   |  
|Interest cost                       |  |                                  | 2,915  |   |                 |   | 935   |         |  |   | 3,100           |   |  |   | 800   |  
|Expected return on plan assets      |  |                                  | (3,784 | ) |                 |   |      |         |  |   | (4,100          | ) |  |   |      |  
|Amortization of prior service costs |  |                                  | (51    | ) |                 |   | (118  | )       |  |   |                |   |  |   | (100  | )
|Amortization of net loss            |  |                                  |       |   |                 |   | 11    |         |  |   |                |   |  |   |      |  
|                                    |  |                                  |        |   |                 |   |       |         |  |   |                 |  
|Net periodic benefit cost           |  | $                                | 1,475  |   |                 | $ | 1,412 |         |  | $ | 1,725           |   |  | $ | 1,325 |  
|                                    |  |                                  |        |   |                 |   |       |         |  |   |                 |  

|                                    |  |                                 |         |   |                 |   |       |         |  |   |                 |   |  |   |       |  
|----------------------------------- |  | ------------------------------- | ------- | - | --------------- | - | ----- | ------- |  | - | --------------- | - |  | - | ----- | -
|                                    |  | Nine Months Ended September 30, |        
|                                    |  |                                 |        
|                                    |  | 2005                            |         |   | 2004            |  
|                                    |  |                                 |         |   |                 |  
|                                    |  | Pension                         |         |   | Post-Retirement |   |       | Pension |  |   | Post-Retirement |  
|                                    |  | Benefit                         |         |   | Benefits        |   |       | Benefit |  |   | Benefits        |  
|                                    |  |                                 |         |   |                 |   |       |         |  |   |                 |  
|Service cost                        |  | $                               | 7,442   |   |                 | $ | 1,751 |         |  | $ | 8,175           |   |  | $ | 1,875 |  
|Interest cost                       |  |                                 | 9,143   |   |                 |   | 2,805 |         |  |   | 9,300           |   |  |   | 2,400 |  
|Expected return on plan assets      |  |                                 | (12,010 | ) |                 |   |      |         |  |   | (12,300         | ) |  |   |      |  
|Amortization of prior service costs |  |                                 | (155    | ) |                 |   | (353  | )       |  |   |                |   |  |   | (300  | )
|Amortization of net loss            |  |                                 |        |   |                 |   | 33    |         |  |   |                |   |  |   |      |  
|                                    |  |                                 |         |   |                 |   |       |         |  |   |                 |  
|Net periodic benefit cost           |  | $                               | 4,420   |   |                 | $ | 4,236 |         |  | $ | 5,175           |   |  | $ | 3,975 |  
|                                    |  |                                 |         |   |                 |   |       |         |  |   |                 |  







Accounting for Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of
2003,


16



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##### Table of Contents



DEX MEDIA, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                              
|--- | -----------------------------
|10. | Commitments and Contingencies



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





|    |                                
|--- | -------------------------------
|(b) | Collective Bargaining Agreement





|    |                           
|--- | --------------------------
|11. | Related Party Transactions







|    |                 
|--- | ----------------
|12. | Subsequent Event



17



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##### Table of Contents



DEX MEDIA, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






18



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##### Table of Contents








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

Executive Overview




| |            
| | -----------
| | Our Company





tm








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







19



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##### Table of Contents





Results of Operations




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





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









20



---



##### Table of Contents





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







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





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





| |                                              
| | ---------------------------------------------
| | Items Affecting Comparability Between Periods





21



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##### Table of Contents













| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | Three Months Ended September 30, 2005 Compared to the
    Three Months Ended September 30, 2004



|                                                                                                           |                                                               |                        |         |         |         |   |         |         |         | 
|---------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | ---------------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                                                                           |                                                               | Three Months Ended     |        
|                                                                                                           |                                                               | September 30,          |        
|                                                                                                           |                                                               |                        |        
|                                                                                                           |                                                               | 2005                   |         |         | 2004    |  
|                                                                                                           |                                                               |                        |         |         |         |  
|                                                                                                           |                                                               | (Dollars in thousands) |        
|Revenue:                                                                                                   |                                                               |                        |         |         |         |   |         |        
|                                                                                                           | Local directory services                                      |                        | $       | 343,156 |         |   | $       | 339,433 |        
|                                                                                                           | National directory services                                   |                        |         | 57,665  |         |   |         | 51,350  |        
|                                                                                                           | Qwest advertising                                             |                        |         | 4,670   |         |   |         | 5,516   |        
|                                                                                                           | Other revenue                                                 |                        |         | 12,858  |         |   |         | 8,509   |        
|                                                                                                           |                                                               |                        |         |         |         |  
|                                                                                                           |                                                               | Total revenue          |         |         | 418,349 |   |         |         | 404,808 | 
|Cost of revenue                                                                                            |                                                               |                        | 124,907 |         |         |   | 123,520 |        
|                                                                                                           |                                                               |                        |         |         |         |  
|                                                                                                           | Gross profit, excluding depreciation and amortization expense |                        | $       | 293,442 |         |   | $       | 281,288 |        
|                                                                                                           | Gross margin                                                  |                        |         | 70.1    | %       |   |         | 69.5    | %      
|General and administrative expense, including bad debt expense
    and termination of annual advisory fees |                                                               | $                      | 63,065  |         |         | $ | 82,004  |        



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



22



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





23



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tm


tm








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





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









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| |                                      
| | -------------------------------------
| | Depreciation and Amortization Expense





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





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





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

Accounting for Income
Taxes,


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| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | Nine Months Ended September 30, 2005 Compared to the
    Nine Months Ended September 30, 2004



|                                                                                                           |                                                               |                        |         |           |           |   |         |           |           | 
|---------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | ---------------------- | ------- | --------- | --------- | - | ------- | --------- | --------- | 
|                                                                                                           |                                                               | Nine Months Ended      |        
|                                                                                                           |                                                               | September 30,          |        
|                                                                                                           |                                                               |                        |        
|                                                                                                           |                                                               | 2005                   |         |           | 2004      |  
|                                                                                                           |                                                               |                        |         |           |           |  
|                                                                                                           |                                                               | (Dollars in thousands) |        
|Revenue:                                                                                                   |                                                               |                        |         |           |           |   |         |          
|                                                                                                           | Local directory services                                      |                        | $       | 1,023,366 |           |   | $       | 1,010,937 |          
|                                                                                                           | National directory services                                   |                        |         | 174,041   |           |   |         | 134,169   |          
|                                                                                                           | Qwest advertising                                             |                        |         | 13,096    |           |   |         | 18,259    |          
|                                                                                                           | Other revenue                                                 |                        |         | 33,927    |           |   |         | 26,851    |          
|                                                                                                           |                                                               |                        |         |           |           |  
|                                                                                                           |                                                               | Total revenue          |         |           | 1,244,430 |   |         |           | 1,190,216 | 
|Cost of revenue                                                                                            |                                                               |                        | 373,208 |           |           |   | 363,905 |          
|                                                                                                           |                                                               |                        |         |           |           |  
|                                                                                                           | Gross profit, excluding depreciation and amortization expense |                        | $       | 871,222   |           |   | $       | 826,311   |          
|                                                                                                           | Gross margin                                                  |                        |         | 70.0      | %         |   |         | 69.4      | %        
|General and administrative expense, including bad debt expense
    and termination of annual advisory fees |                                                               | $                      | 176,581 |           |           | $ | 188,187 |          



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









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









TM




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





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















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| |                              
| | -----------------------------
| | Depreciation and Amortization





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





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





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



Liquidity and Capital Resources




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





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













| |                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------
| | i. Cash from operating cash flow;                                                                                            
|
| | ii. Up to $167.0 million of our subsidiaries
    revolving loans available to our subsidiaries as of
    September 30, 2005;

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | iii. Other unsecured indebtedness up to an aggregate
    principal amount of $360.0 million of which our
    subsidiaries may incur up to an aggregate principal amount of
    $125.0 million;                                                                                                                                                                                                                                                                               
|
| | iv. Dex Media East and Dex Media West, respectively, may
    sell, or dispose of, assets up to $10.0 million and
    $15.0 million annually, subject to an aggregate amount of
    $20.0 million and $30.0 million, respectively;                                                                                                                                                                                                                                            
|
| | v. The proceeds from any debt issuance, which our
    subsidiaries may use as long as the respective leverage ratio of
    Dex Media East and Dex Media West is at or below 4.0 to
    1.0; and                                                                                                                                                                                                                                                                              
|
| | vi. Our subsidiaries may use the proceeds from any equity
    offering as follows: (i) 50%, if the respective leverage
    ratio is above 4.0 to 1.0 or (ii) 100%, if the respective
    leverage ratio is at or below 4.0 to 1.0. As a condition to the
    closing of the IPO, we amended our subsidiaries credit
    facilities to, among other things, allow our subsidiaries access
    to 100% of the proceeds from the IPO irrespective of their
    leverage ratios.





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











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Material Trends, Known Facts and Uncertainties




| |                           
| | --------------------------
| | Directory Services Revenue







| |                  
| | -----------------
| | Segmented Pricing





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







| |         
| | --------
| | Internet



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





| |            
| | -----------
| | Fuel Prices





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



Critical Accounting Policies and Estimates






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





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



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





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



New Accounting Standards








Cautionary Note Regarding Forward-Looking Statements




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

Long-Term Debt






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Interest Rate Risk









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





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PART II.


OTHER INFORMATION







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










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








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








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








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








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

|              |  |                                                                                                                                                           
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 31.1  |  | Certification of Chief Executive Officer of Dex Media, Inc.
    pursuant to Section 302 of the Sarbanes Oxley Act of 2002.                                
|             
|Exhibit 31.2  |  | Certification of Chief Financial Officer of Dex Media, Inc.
    pursuant to Section 302 of the Sarbanes Oxley Act of 2002.                                
|             
|Exhibit 32.1* |  | Certification of Chief Executive Officer and Chief Financial
    Officer of Dex Media, Inc. pursuant to Section 906 of the
    Sarbanes Oxley Act of 2002.






|  |                                                                                                                                                                                                                                                                                                                                                                                                               
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Exhibit 32.1 is being furnished solely to accompany this
    report pursuant to 18 U.S.C. § 1350, and is not
    being filed for purposes of Section 18 of the Securities
    Exchange Act of 1934, as amended, and is not to be incorporated
    by reference into any of our filings, whether made before or
    after the date hereof, regardless of any general incorporation
    language in such filing.

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SIGNATURE






| |                
| | ---------------
| | DEX MEDIA, INC.



| |     |                     
| | --- | --------------------
| | By: | /s/ SCOTT A. POMEROY

| |                                                          
| | ---------------------------------------------------------
| |                                                          
| | Scott A. Pomeroy                                         
| | Executive Vice President and Chief Financial Officer     
| | (Principal Financial Officer and Duly Authorized Officer)



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EXHIBIT INDEX


|              |  |                                                                                                                                                           
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 31.1  |  | Certification of Chief Executive Officer of Dex Media, Inc.
    pursuant to Section 302 of the Sarbanes Oxley Act of 2002.                                
|             
|Exhibit 31.2  |  | Certification of Chief Financial Officer of Dex Media, Inc.
    pursuant to Section 302 of the Sarbanes Oxley Act of 2002.                                
|             
|Exhibit 32.1* |  | Certification of Chief Executive Officer and Chief Financial
    Officer of Dex Media, Inc. pursuant to Section 906 of the
    Sarbanes Oxley Act of 2002.






|  |                                                                                                                                                                                                                                                                                                                                                                                                               
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Exhibit 32.1 is being furnished solely to accompany this
    report pursuant to 18 U.S.C. § 1350, and is not
    being filed for purposes of Section 18 of the Securities
    Exchange Act of 1934, as amended, and is not to be incorporated
    by reference into any of our filings, whether made before or
    after the date hereof, regardless of any general incorporation
    language in such filing.

40