Benefit Plans

At December 31, 2012, the Company has two defined benefit pension plans (the Dex One Retirement Plan and the Dex Media, Inc. Pension Plan, defined below), which participate in the Dex One Corporation Retirement Account Master Trust (“Master Trust”), and two defined contribution plans (the Dex One 401(k) Savings Plan and the Dex Media, Inc. Employee Savings Plan). A summary of each of these plans is provided below. The Business.com, Inc. 401(k) Plan was merged with and into the Dex One 401(k) Savings Plan effective February 1, 2011. During 2011, former employees of the Company were able to participate in two postretirement plans (the Dex One Group Benefit Plan and the Dex Media Group Benefit Plan). Effective January 1, 2011, participants who elected to continue coverage under the Dex One Group Benefit Plan became responsible for making their individual premium payments associated with this plan. Although the Dex One Group Benefit Plan remains active for these participants, the Company does not have any future benefit obligation associated with this plan. The Company terminated the Dex Media Group Benefit Plan effective January 1, 2012 and therefore we do not have any future benefit obligation associated with this plan.

Dex One Retirement Plan. The Dex One cash balance defined benefit pension plan (the “Dex One Retirement Plan” formerly the "RHD Retirement Plan") covers substantially all legacy Dex One employees with at least one year of service. The benefits to be paid to employees are based on age, years of service and a percentage of total annual compensation. The percentage of compensation allocated to a retirement account ranges from 3.0% to 12.5% depending on age and years of service (“cash balance benefit”). Benefits for certain employees who were participants in the predecessor The Dun & Bradstreet Corporation (“D&B”) defined benefit pension plan are also determined based on the participant’s average compensation and years of service (“final average pay benefit”) and benefits to be paid will equal the greater of the final average pay benefit or the cash balance benefit. Annual pension costs are determined using the projected unit credit actuarial cost method. Our funding policy is to contribute an amount at least equal to the minimum legal funding requirement. The Company was required to make contributions of $5.2 million, $3.1 million and $1.0 million to the Dex One Retirement Plan during the years ended December 31, 2012 and 2011 and eleven months ended December 31, 2010, respectively. The Predecessor Company was not required to make contributions to the Dex One Retirement Plan during the one month ended January 31, 2010. The underlying pension plan assets are invested in diversified portfolios consisting primarily of equity and debt securities. A measurement date of December 31 is used for all of our plan assets.

We also have an unfunded non-qualified defined benefit pension plan, the Pension Benefit Equalization Plan (“PBEP”), which covers senior executives and certain key employees. Benefits are based on years of service and compensation (including compensation not permitted to be taken into account under the previously mentioned defined benefit pension plan). The Company made contributions of $1.1 million, $0.6 million and $1.9 million to the PBEP during the years ended December 31, 2012 and 2011 and eleven months ended December 31, 2010, respectively. The Predecessor Company did not make any contributions to the PBEP during the one month ended January 31, 2010.

Dex Media Pension Plan. We have a noncontributory defined benefit pension plan covering substantially all non-union and union employees within Dex Media (the “Dex Media Pension Plan”). Annual pension costs are determined using the projected unit credit actuarial cost method. Our funding policy is to contribute an amount at least equal to the minimum legal funding requirement. The Company was required to make contributions of $9.0 million, $13.6 million and $8.8 million to the Dex Media Pension Plan during the years ended December 31, 2012 and 2011 and eleven months ended December 31, 2010, respectively. The Predecessor Company was not required to make contributions to the Dex Media Pension Plan during the one month ended January 31, 2010. The underlying pension plan assets are invested in diversified portfolios consisting primarily of equity and debt securities. A measurement date of December 31 is used for all of our plan assets.

The Company has frozen the Dex Media Pension Plan covering CWA and IBEW represented employees and the Dex One Retirement Plan and Dex Media Pension Plan covering all non-union employees. In connection with the freeze, all pension plan benefit accruals for CWA and IBEW plan participants ceased as of December 31, 2009 and all pension plan benefit accruals for non-union plan participants ceased as of December 31, 2008, however, all plan balances remained intact and interest credits on participant account balances under an account balance formula, as well as service credits for vesting and retirement eligibility, continue in accordance with the terms of the plans. In addition, supplemental transition credits have been provided to certain plan participants nearing retirement who would otherwise lose a portion of their anticipated pension benefit at age 65 as a result of freezing the current plans. Similar supplemental transition credits will be provided to certain plan participants who were grandfathered under a final average pay formula when the defined benefit plans were previously converted from traditional pension plans to cash balance plans.

Savings Plans. Under each of our savings plans, we contribute 100% for each dollar contributed by participating employees, up to a maximum of 6% of each participating employee’s salary, including bonus and commissions, and contributions made by the Company are fully vested for participants who have completed one year of service with the Company. The Company made contributions to the Dex One 401(k) Savings Plan of $7.6 million, $9.0 million and $8.7 million during the years ended December 31, 2012 and 2011 and eleven months ended December 31, 2010, respectively, the Dex Media, Inc. Employee Savings Plan of $2.1 million, $2.4 million and $4.7 million during the years ended December 31, 2012 and 2011 and eleven months ended December 31, 2010, respectively, and the Business.com, Inc. 401(k) Plan of $0.3 million during the eleven months ended December 31, 2010. No contributions were made to the Business.com, Inc. 401(k) Plan during the year ended December 31, 2011. Contributions made by the Predecessor Company to the Dex One 401(k) Savings Plan and Dex Media, Inc. Employee Savings Plan were $0.5 million and $0.4 million, respectively, for the one month ended January 31, 2010. Contributions made by the Predecessor Company to the Business.com, Inc. 401(k) Plan were $0.1 million for the one month ended January 31, 2010.

The Company maintains the Dex One 401(k) Restoration Plan for those employees with compensation in excess of the IRS annual limits. Effective January 1, 2011, the Dex One 401(k) Restoration Plan was amended to eliminate matching credits.

Other Benefits Information - Union Employees


•	All access to retiree health care and life insurance benefits has been eliminated for IBEW represented employees retiring after May 8, 2009 and for CWA represented employees retiring after October 2, 2009;


•	Retiree life insurance benefits have been eliminated effective January 1, 2010;


•	The two-year phase out of subsidized retiree health care benefits commenced January 1, 2010; and


•	Effective January 1, 2012, retiree health care benefits have been eliminated for all retirees.

Other Benefits Information – Non-Union Employees


•	All non-subsidized access to retiree health care and life insurance benefits were eliminated effective January 1, 2009;


•	Subsidized retiree health care benefits for any Medicare-eligible retirees were eliminated effective January 1, 2009; and

•

The three-year phase out of subsidized retiree health care benefits commenced January 1, 2009 (with non-union retiree health care benefits terminating December 31, 2011, except for continued non-subsidized access to retiree benefits for retirees enrolled as of December 31, 2008). With respect to the phase out of subsidized retiree health care benefits, if an eligible retiree becomes Medicare-eligible at any point in time during the phase out process noted above, such retiree will no longer be eligible for retiree health care coverage.

Benefit Obligation and Funded Status

A summary of the funded status of the Company’s benefit plans at December 31, 2012 and 2011 is as follows:



	Pension Plans						Postretirement Plans
	December 31, 2012			December 31, 2011			December 31, 2012		December 31, 2011
Change in benefit obligation
Benefit obligation, beginning of year	$	249,234		$	257,245		$	—	$	1,040
Interest cost	10,693			12,707			—		26
Actuarial loss (gain)	27,928			11,269			—		(727		)
Benefits paid	(13,500		)	(7,769		)	—		(339		)
Plan settlements	(18,478		)	(24,218		)	—		—
Benefit obligation, end of year	$	255,877		$	249,234		$	—	$	—

Change in plan assets
Fair value of plan assets, beginning of year	$	174,358		$	187,327		$	—	$	—
Return on plan assets	20,342			1,689			—		—
Employer contributions	15,251			17,329			—		339
Benefits paid	(13,500		)	(7,769		)	—		(339		)
Plan settlements	(18,478		)	(24,218		)	—		—
Fair value of plan assets, end of year	$	177,973		$	174,358		$	—	$	—
Funded status at end of year	$	(77,904	)	$	(74,876	)	$	—	$	—

Net amounts recognized in the Company’s consolidated balance sheet at December 31, 2012 and 2011 were as follows:



	Pension Plans						Postretirement Plans
	December 31, 2012			December 31, 2011			December 31, 2012		December 31, 2011
Current liabilities	$	(496	)	$	(541	)	$	—	$	—
Non-current liabilities	(77,408		)	(74,335		)	—		—
Net amount recognized	$	(77,904	)	$	(74,876	)	$	—	$	—

The accumulated benefit obligation for all qualified defined benefit pension plans of the Company was $255.9 million and $249.2 million at December 31, 2012 and 2011, respectively.

Components of Net Periodic Benefit Expense (Income)

The net periodic benefit expense (income) of the Company’s pension plans for the years ended December 31, 2012 and 2011 and eleven months ended December 31, 2010 and the Predecessor Company’s pension plans for the one month ended January 31, 2010 was as follows:



	Successor Company									Predecessor Company
	Years Ended December 31,						Eleven Months Ended December 31, 2010			One Month Ended January 31, 2010
	2012			2011			Eleven Months Ended December 31, 2010			One Month Ended January 31, 2010
Interest cost	$	10,693		$	12,707		$	12,432		$	1,124
Expected return on plan assets	(13,419		)	(14,500		)	(12,201		)	(1,385		)
Settlement loss	3,746			2,748			17			—
Amortization of unrecognized prior service cost	—			—			—			81
Curtailment gain	—			—			(3,754		)	—
Amortization of unrecognized net loss	856			2			—			122
Net periodic benefit expense (income)	$	1,876		$	957		$	(3,506	)	$	(58	)

The net periodic benefit income of the Company’s postretirement plans for the years ended December 31, 2012 and 2011 and eleven months ended December 31, 2010 and the Predecessor Company’s postretirement plans for the one month ended January 31, 2010 was as follows:



	Successor Company								Predecessor Company
	Years Ended December 31,					Eleven Months Ended December 31, 2010			One Month Ended January 31, 2010
	2012		2011			Eleven Months Ended December 31, 2010			One Month Ended January 31, 2010
Interest cost	$	—	$	26		$	107		$	10
Amortization of unrecognized net gain	—		(1,111		)	(291		)	(21		)
Net periodic benefit income	$	—	$	(1,085	)	$	(184	)	$	(11	)

In accordance with fresh start accounting and reporting, unamortized amounts previously charged to accumulated other comprehensive loss of $44.7 million were eliminated on the Fresh Start Reporting Date.

As of December 31, 2012, there is approximately $2.4 million of previously unrecognized actuarial losses in accumulated other comprehensive loss expected to be recognized as net periodic benefit expense in 2013.

Amounts recognized in accumulated other comprehensive loss for the Company at December 31, 2012 and 2011 consist of the following:



	Pension Plans				Postretirement Plans
	December 31, 2012		December 31, 2011		December 31, 2012		December 31, 2011

Net actuarial loss	$	16,402	$	21,330	$	—	$	1,111

Assumptions

The following assumptions were used in determining the benefit obligations for the Company's pension plans and postretirement plans for the years ended December 31, 2012 and 2011.



	Years Ended December 31,
	2012	2011
Weighted average discount rates:
Dex One Retirement Plan	3.64%	4.51%
Dex One Postretirement Plan	—%	—%
Dex Media Pension Plan	3.65%	4.38%
Dex Media Postretirement Plan	—%	4.95%

The discount rate reflects the current rate at which the pension and postretirement obligations could effectively be settled at the end of the year. For the years ended December 31, 2012 and 2011, eleven months ended December 31, 2010 and one month ended January 31, 2010, the Company and the Predecessor Company utilized a yield curve to determine the appropriate discount rate for each of the defined benefit pension plans based on the individual plans’ expected future cash flows. Since the pension plans have been frozen, no rate of increase in future compensation was utilized to calculate the benefit obligations of the Company at December 31, 2012 and 2011.

On December 31, 2012 and April 30, 2012, settlements of the Dex Media Pension Plan and PBEP occurred as a result of restructuring activities. At that time, year-to-date lump sum payments to participants exceeded the sum of the service cost plus interest cost components of the net periodic benefit cost for the period. These settlements resulted in the recognition of an actuarial loss of $3.7 million for the year ended December 31, 2012. Pension expense for the Dex Media Pension Plan and PBEP were recomputed based on assumptions as of December 31, 2012, resulting in a decrease in the discount rate from 4.38% at April 30, 2012 to 4.22% for the Dex Media Pension Plan and 4.51% at April 30, 2012 to 4.25% for the PBEP. Pension expense for the Dex Media Pension Plan and PBEP were recomputed based on assumptions as of April 30, 2012, resulting in a decrease in the discount rate from 4.95% at December 31, 2011 to 4.38% for the Dex Media Pension Plan and 5.30% at December 31, 2011 to 4.51% for the PBEP. The expected return on plan assets assumption was also reduced for the Company's benefit plans from 8.0% at December 31, 2011 to 7.5% based on a review of historical performance and long-term capital market return forecasts.

On December 31, 2011, settlements of the Dex One Retirement Plan and Dex Media Pension Plan occurred as a result of restructuring actions. On May 31, 2011, settlements of the Dex Media Pension Plan occurred as a result of restructuring actions. These settlements resulted in the recognition of actuarial losses of $2.7 million for the year ended December 31, 2011. Pension expense for the Dex One Retirement Plan was recomputed based on assumptions as of December 31, 2011, resulting in a decrease in the discount rate from 5.70% at December 31, 2010 to 5.30%. Pension expense for the Dex Media Pension Plan was recomputed based on assumptions as of December 31, 2011, resulting in a decrease in the discount rate from 5.06% at May 31, 2011 to 4.95%. Pension expense for the Dex Media Pension Plan was recomputed based on assumptions as of May 31, 2011, resulting in a decrease in the discount rate from 5.70% at December 31, 2010 to 5.06%.

During the second quarter of 2010, we recognized a one-time curtailment gain of $3.8 million associated with the departure of the Company’s former Chief Executive Officer, which is included in general and administrative expenses on the consolidated statement of comprehensive income (loss) for the eleven months ended December 31, 2010.

The following assumptions were used in determining the Company’s net periodic benefit expense (income) for the Dex One Retirement Plan and Dex Media Pension Plan:



	Dex One Retirement Plan			Dex Media Pension Plan
	Years Ended December 31,		Eleven Months Ended December 31, 2010	May 1, 2012 through December 31, 2012	January 1, 2012 through April 30, 2012	June 1, 2011 through December 31, 2011	January 1, 2011 through May 31, 2011	Eleven Months Ended December 31, 2010
	2012	2011	Eleven Months Ended December 31, 2010	May 1, 2012 through December 31, 2012	January 1, 2012 through April 30, 2012	June 1, 2011 through December 31, 2011	January 1, 2011 through May 31, 2011	Eleven Months Ended December 31, 2010
Weighted average discount rate	4.51%	5.30%	5.70%	4.22%	4.38%	4.95%	5.06%	5.70%
Expected return on plan assets	7.50%	8.00%	8.00%	7.50%	7.50%	8.00%	8.00%	8.00%

The following assumptions were used in determining the Predecessor Company’s net periodic benefit income for the Dex One Retirement Plan and Dex Media Pension Plan:



	Dex One Retirement Plan	Dex Media Pension Plan
	One Month Ended January 31, 2010
Weighted average discount rate	5.70%	5.70%
Expected return on plan assets	8.00%	8.00%

The following assumptions were used in determining the Company’s net periodic benefit income for the Dex One postretirement plan and Dex Media postretirement plan:



	Dex One Postretirement Plan			Dex Media Postretirement Plan
	Years Ended December 31,		Eleven Months Ended December 31, 2010	Years Ended December 31,		Eleven Months Ended December 31, 2010
	2012	2011	Eleven Months Ended December 31, 2010	2012	2011	Eleven Months Ended December 31, 2010
Weighted average discount rate	—%	—%	5.70%	—%	5.06%	5.70%

The following assumptions were used in determining the Predecessor Company’s net periodic benefit income for the Dex One postretirement plan and Dex Media postretirement plan:



	Dex One Postretirement Plan	Dex Media Postretirement Plan
	One Month Ended January 31, 2010
Weighted average discount rate	5.70%	5.70%

Plan Assets

The fair value of the assets held in the Master Trust at December 31, 2012 and 2011, by asset category, is as follows:



	Fair Value Measurements at December 31, 2012
			Quoted Prices in Active Markets for Identical Assets		Using Significant Other Observable Inputs
	Total		(Level 1)		(Level 2)
Cash and cash equivalents	$	1,450	$	1,450	$	—
U.S. Government securities (a)	23,309		—		23,309
Common/collective trusts (b)	62,031		—		62,031
Corporate debt (c)	17,806		—		17,806
Corporate stock (d)	17,234		17,234		—
Registered investment companies (e)	21,298		21,298		—
Fixed income and equity futures (g)	1,005		1,005		—
Credit default swaps (h)	12		—		12
Collective Fund - Group Trust (i)	33,828		—		33,828
Total	$	177,973	$	40,987	$	136,986



	Fair Value Measurements at December 31, 2011
			Quoted Prices in Active Markets for Identical Assets		Using Significant Other Observable Inputs
	Total		(Level 1)		(Level 2)
Cash and cash equivalents	$	15	$	15	$	—
U.S. Government securities (a)	18,686		—		18,686
Common/collective trusts (b)	66,188		—		66,188
Corporate debt (c)	21,146		—		21,146
Corporate stock (d)	18,476		18,476		—
Registered investment companies (e)	19,631		19,631		—
Real estate investment trust (f)	127		127		—
Fixed income and equity futures (g)	1,066		1,066		—
Credit default swaps (h)	95		—		95
Collective Fund - Group Trust (i)	28,928		—		28,928
Total	$	174,358	$	39,315	$	135,043


(a)	This category includes investments in U.S. Government bonds, government mortgage-backed securities, index-linked government bonds, guaranteed commercial paper, short-term treasury bills and notes. Fair value for these assets is determined using a bid evaluation process of observable, market based inputs effective as of the last business day of the plan year.

(b)

This category includes investments in two common/collective funds of which 78% is invested in stocks comprising the Russell 1000 equity index and the remaining 22% is comprised of short-term investments at December 31, 2012 and 82% is invested in stocks comprising the Russell 1000 equity index and the remaining 18% is comprised of short-term investments at December 31, 2011. Fair value for these assets is calculated based upon a compilation of observable market information.


(c)	This category includes investments in corporate bonds, commercial mortgage-backed and asset-backed securities and collateralized mortgage obligations. Fair value for these assets is determined using a bid evaluation process of observable, market based inputs effective as of the last business day of the plan year.


(d)	This category includes investments in small cap stocks across diverse industries. Fair value for these assets is determined using quoted market prices on a recognized securities exchange at the last reported trading price on the last business day of the plan year.


(e)	This category is comprised of one mutual fund that invests in intermediate term fixed income instruments such as treasuries and high grade corporate bonds. Fair value for these assets is determined using quoted market prices on a recognized securities exchange at the last reported trading price on the last business day of the plan year.


(f)	This category is comprised of a healthcare real estate investment trust. Fair value for these assets is determined based on traded market prices.


(g)	This category includes investments in 5, 10 and 20 year U.S. Treasury bond futures and equity index futures. Fair value for these assets is determined based on settlement prices recognized in an active market or exchange.


(h)	This category includes investments in credit default swaps. Fair value for these assets is determined based on a mid evaluation process using observable, market based inputs.


(i)	This category includes investments in passively managed funds composed of international stocks across diverse industries. Fair value for these assets is calculated based upon a compilation of observable market information.

The Company's pension plan weighted-average asset allocation in the Master Trust at December 31, 2012 and 2011 by asset category on a weighted average basis, is as follows:



	December 31, 2012		December 31, 2011
	Plan Assets	Asset Allocation Target	Plan Assets	Asset Allocation Target
Equity securities	63%	65%	65%	65%
Debt securities	37%	35%	35%	35%
Total	100%	100%	100%	100%

The Asset Management Committee (“AMC”) as appointed by the Compensation and Benefits Committee of the Company's Board of Directors is a named fiduciary of the plan in matters relating to plan investments and asset management. The AMC has the authority to appoint, retain, monitor and remove any custodian or investment manager and is responsible for establishing and maintaining a funding and investment policy for the Master Trust.

The plans' assets are invested in accordance with investment practices that emphasize long-term investment fundamentals. The plans' investment objective is to achieve a positive rate of return over the long term from capital appreciation and a growing stream of current income that would significantly contribute to meeting the plans' current and future obligations. These objectives can be obtained through a well-diversified portfolio structure in a manner consistent with each plan's investment policy statement.

The plans' assets are invested in marketable equity and fixed income securities managed by professional investment managers. Plan assets are invested using a combination of active and passive (indexed) investment strategies. The plans' assets are to be broadly diversified by asset class, investment style, number of issues, issue type and other factors consistent with the investment objectives outlined in each plan's investment policy statement. The plans' assets are to be invested with prudent levels of risk and with the expectation that long-term returns will maintain and contribute to increasing purchasing power of the plans' assets, net of all disbursements, over the long term.

The plans' assets in separately managed accounts may not be used for the following purposes: short sales, purchases of letter stock, private placements, leveraged transactions, commodities transactions, option strategies, investments in some limited partnerships, investments by the managers in their own securities, their affiliates or subsidiaries, investment in futures, use of margin or investments in any derivative not explicitly permitted in each plan's investment policy statement.

The plans' fixed income manager uses derivative financial instruments in the normal course of its investing activities to hedge against adverse changes in the fixed income market and to achieve overall investment portfolio objectives. These financial instruments include U.S. Treasury futures contracts, equity futures contracts and credit default swaps. The futures held are a combination of 5, 10 and 20 year futures and are being used to manage the duration exposure of the portfolio. The credit default swaps are held as a hedge against declines in certain bond markets and as a vehicle to take advantage of opportunities in certain segments of the fixed income market. The plans' investment policy statements do not allow the use of derivatives to leverage the portfolio or for speculative purposes. In addition, the plans' investment managers synthetically invest cash, which is primarily held to fund benefit payments, through the use of equity and fixed income index futures contracts. The use of specific futures contracts is guided by the Master Trust's asset allocation targets. Consequently, this strategy enables the Master Trust to achieve its asset allocation targets while maintaining sufficient liquidity to meet benefit payments. The use of derivatives is not believed to materially increase the credit or market risk of the plans' investments.

For the years ended December 31, 2012 and 2011, eleven months ended December 31, 2010 and one month ended January 31, 2010, the Company and Predecessor Company used a rate of 7.50%, 8.00%, 8.00% and 8.00%, respectively, as the expected long-term rate of return assumption on the plan assets for the Dex One Retirement Plan and Dex Media Pension Plan. The basis used for determining these rates was the long-term capital market return forecasts for an asset mix similar to the plans' asset allocation target of 65% equity securities and 35% debt securities at the beginning of each such year. The basis used for determining these rates also included an opportunity for active management of the assets to add value over the long term. The active management expectation was supported by calculating historical returns for the investment managers who actively managed the plans' assets.

Although we review our expected long-term rate of return assumption on an annual basis or more frequently if deemed necessary, the performance in any one particular year does not, by itself, significantly influence our evaluation. Our assumption is generally not revised unless there is a fundamental change in one of the factors upon which it is based, such as the target asset allocation or long-term capital market return forecasts.

Estimated Future Benefit Payments

The Company’s pension plans' benefits expected to be paid in each of the next five fiscal years and in the aggregate for the five fiscal years thereafter are as follows:



	Pension Plans
2013	$	16,847
2014	17,020
2015	16,444
2016	17,100
2017	16,023
Years 2018-2022	78,371

We expect to make total contributions of approximately $4.7 million to our pension plans in 2013.