10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended June 30, 2011

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 001-07155

DEX ONE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	13-2740040
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

1001 Winstead Drive, Cary, N.C.	27513
(Address of principal executive offices)	(Zip Code)

(919) 297-1600

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former
fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o

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

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes þ No o

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

Title of class	Shares Outstanding at July 15, 2011
Common Stock, par value $.001 per share	50,158,556

DEX ONE CORPORATION

INDEX TO FORM 10-Q

	PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at June 30, 2011 and December 31, 2010		3
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2011, the three and five months ended June 30, 2010 (Successor Company) and the one month ended January 31, 2010 (Predecessor Company)		4
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2011, the five months ended June 30, 2010 (Successor Company) and the one month ended January 31, 2010 (Predecessor Company)		5
Notes to Condensed Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3. Quantitative and Qualitative Disclosures About Market Risk		43
Item 4. Controls and Procedures		44
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		45
Item 1A Risk Factors		45
Item 6. Exhibits		45
SIGNATURES		46
EX-10.1
EX-10.2
EX-31.1
EX-31.2
EX-32.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)

Dex One Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share data)	June 30, 2011			December 31, 2010
Assets
Current Assets
Cash and cash equivalents	$	169,644		$	127,852
Accounts receivable:
Billed		199,156			186,477
Unbilled		545,506			567,839
Allowance for doubtful accounts		(84,367	)		(75,891	)
Net accounts receivable		660,295			678,425
Deferred directory costs		140,922			147,025
Deferred income taxes, net		47,836			84,149
Prepaid expenses and other current assets		57,790			82,656
Total current assets		1,076,487			1,120,107
Fixed assets and computer software, net		171,120			188,749
Other non-current assets		11,416			9,762
Intangible assets, net		2,285,499			2,369,156
Goodwill, net		—			801,074
Total Assets	$	3,544,522		$	4,488,848
Liabilities and Shareholders’ (Deficit) Equity
Current Liabilities
Accounts payable and accrued liabilities	$	142,234		$	154,540
Accrued interest		27,715			30,905
Deferred directory revenues		691,436			722,566
Current portion of long-term debt		298,907			249,301
Total current liabilities		1,160,292			1,157,312
Long-term debt		2,298,084			2,487,920
Deferred income taxes, net		42,424			205,812
Other non-current liabilities		61,732			111,888
Total liabilities		3,562,532			3,962,932
Commitments and contingencies
Shareholders’ (Deficit) Equity
Common stock, par value $.001 per share, authorized — 300,000,000 shares; issued and outstanding — 50,158,556 shares at June 30, 2011 and 50,031,441 shares at December 31, 2010		50			50
Additional paid-in capital		1,457,824			1,455,223
Accumulated deficit		(1,470,290	)		(923,592	)
Accumulated other comprehensive loss		(5,594	)		(5,765	)
Total shareholders’ (deficit) equity		(18,010	)		525,916
Total Liabilities and Shareholders’ (Deficit) Equity	$	3,544,522		$	4,488,848

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

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Dex One Corporation and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)

	Successor Company												Predecessor Company
	Three Months			Six Months			Three Months			Five Months			One Month
	Ended			Ended			Ended			Ended			Ended
(in thousands, except per share data)	June 30, 2011			June 30, 2011			June 30, 2010			June 30, 2010			January 31, 2010
Net revenues	$	377,266		$	768,501		$	160,891		$	214,035		$	160,372
Expenses:
Production and distribution expenses (exclusive of depreciation and amortization shown separately below)		75,154			150,212			49,188			76,751			26,949
Selling and support expenses		110,844			214,904			94,854			154,190			40,866
General and administrative expenses		36,051			74,149			41,138			63,329			8,322
Depreciation and amortization		61,905			115,987			59,581			99,005			20,161
Impairment charges		801,074			801,074			769,674			769,674			—
Total expenses		1,085,028			1,356,326			1,014,435			1,162,949			96,298
Operating income (loss)		(707,762	)		(587,825	)		(853,544	)		(948,914	)		64,074
Gain on sale of assets		—			13,437			—			—			—
Interest expense, net		(58,059	)		(115,779	)		(73,423	)		(122,357	)		(19,656	)
Income (loss) before reorganization items, net and income taxes		(765,821	)		(690,167	)		(926,967	)		(1,071,271	)		44,418
Reorganization items, net		—			—			—			—			7,793,132
Income (loss) before income taxes		(765,821	)		(690,167	)		(926,967	)		(1,071,271	)		7,837,550
(Provision) benefit for income taxes		163,714			143,469			157,044			558,566			(917,541	)
Net income (loss)	$	(602,107	)	$	(546,698	)	$	(769,923	)	$	(512,705	)	$	6,920,009
Earnings (loss) per share:
Basic	$	(12.01	)	$	(10.92	)	$	(15.39	)	$	(10.25	)	$	100.3
Diluted	$	(12.01	)	$	(10.92	)	$	(15.39	)	$	(10.25	)	$	100.2
Shares used in computing earnings (loss) per share:
Basic		50,123			50,082			50,016			50,013			69,013
Diluted		50,123			50,082			50,016			50,013			69,052
Comprehensive Income (Loss)
Net income (loss)	$	(602,107	)	$	(546,698	)	$	(769,923	)	$	(512,705	)	$	6,920,009
Amortization of gain on interest rate swaps, net of tax		—			—			—			—			1,083
Benefit plans adjustment, net of tax		171			171			—			—			(4,535	)
Comprehensive income (loss)	$	(601,936	)	$	(546,527	)	$	(769,923	)	$	(512,705	)	$	6,916,557

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

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Dex One Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)

		Successor Company					Predecessor Company
	Six Months			Five Months			One Month
	Ended			Ended			Ended
(in thousands)	June 30, 2011			June 30, 2010			January 31, 2010
Cash Flows Provided By Operating Activities	$	212,616		$	240,060		$	71,741
Cash Flows from Investing Activities
Additions to fixed assets and computer software		(14,806	)		(15,192	)		(1,766	)
Proceeds from sale of assets		15,391			—			—
Net cash provided by (used in) investing activities		585			(15,192	)		(1,766	)
Cash Flows from Financing Activities
Credit facilities repayments		(155,001	)		(303,436	)		(511,272	)
Debt issuance costs and other financing items, net		497			(2,785	)		(22,096	)
(Decrease) increase in checks not yet presented for payment		(16,905	)		3,653			(3,092	)
Net cash used in financing activities		(171,409	)		(302,568	)		(536,460	)
Increase (decrease) in cash and cash equivalents		41,792			(77,700	)		(466,485	)
Cash and cash equivalents, beginning of period		127,852			199,455			665,940
Cash and cash equivalents, end of period	$	169,644		$	121,755		$	199,455
Supplemental Information:
Cash interest, net	$	104,566		$	69,263		$	15,460
Cash income taxes, net	$	5,524		$	2,148		$	—

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

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Dex One Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(tabular amounts in thousands, except share and per share data and where otherwise indicated)

1. Business and Basis of Presentation

The interim condensed consolidated financial statements of Dex One Corporation and its direct and indirect wholly-owned subsidiaries (“Dex One,” the “Successor Company,” the “Company,” “Parent Company,” “we,” “us” and “our”) have been prepared in accordance with the Securities and Exchange Commission’s (“SEC”) instructions to this Quarterly Report on Form 10-Q and should be read in conjunction with the financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2010. The interim condensed consolidated financial statements include the accounts of Dex One and its direct and indirect wholly-owned subsidiaries. As of June 30, 2011, R.H. Donnelley Corporation, R.H. Donnelley Inc. (“RHDI”), Dex Media, Inc. (“Dex Media”), the legal entity of Business.com, Inc. (“Business.com”) and Dex One Service, Inc. (“Dex One Service”) were our only direct wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated. The results of interim periods are not necessarily indicative of results for the full year or any subsequent period. In the opinion of management, all material adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of financial position, results of operations and cash flows at the dates and for the periods presented have been included.

Dex One became the successor registrant to R.H. Donnelley Corporation (“RHD” or the “Predecessor Company”) upon emergence from Chapter 11 relief under Title 11 of the United States Code (“Chapter 11”) on January 29, 2010 (the “Effective Date”). References to the Predecessor Company in this Quarterly Report on Form 10-Q pertain to periods prior to the Effective Date.

In conjunction with our restructuring plan that commenced during the fourth quarter of 2010 and the resulting changes in our organizational structure, certain prior period amounts included in the unaudited condensed consolidated statements of operations have been reclassified to conform to the current period’s presentation. See Note 4, “Restructuring Charges” for additional information.

Corporate Overview

We are a marketing solutions company that helps local businesses generate leads and manage their presence among consumers in the markets we serve. Our marketing solutions combine multiple media platforms that drive large volumes of leads to our clients. Our locally based marketing consultants offer local businesses personalized marketing consulting services and exposure across these media platforms, including our print, online and mobile yellow pages and search solutions, as well as major search engines.

Our proprietary marketing solutions include our Dex published yellow pages directories, which we co-brand with other recognizable brands in the industry such as CenturyLink and AT&T, our Internet yellow pages site, DexKnows.com ^® and our mobile application, Dex Mobile ^®. Our growing list of marketing solutions also includes local business and market analysis, message and image creation, target market identification, advertising and digital profile creation, keyword and search engine optimization strategies and programs, distribution strategies, social strategies, and tracking and reporting. Our digital affiliate marketing solutions are powered by our search engine marketing product, DexNet™, which extends our clients’ reach to our leading Internet and mobile partners to attract consumers searching for local products and services within our markets.

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2. Summary of Significant Accounting Policies

Revenue Recognition

Our advertising revenues are earned primarily from the sale of advertising in yellow pages directories we publish. Advertising revenues also include revenues from our Internet-based marketing solutions including online directories, such as DexKnows.com and DexNet. Advertising revenues are affected by several factors, including changes in the quantity, size and characteristics of advertisements, acquisition of new clients, renewal rates of existing clients, premium advertisements sold, changes in advertisement pricing, the introduction of new marketing solutions, an increase in competition and more fragmentation in the local business search market and general economic factors. Revenues with respect to print advertising and Internet-based marketing solutions that are sold with print advertising are recognized under the deferral and amortization method whereby revenues are initially deferred when a directory is published, net of sales claims and allowances, and recognized ratably over the directory’s life, which is typically 12 months. Revenues with respect to Internet-based marketing solutions that are sold standalone, such as DexNet, are recognized ratably over the life of the contract commencing when they are first delivered or fulfilled. Revenues with respect to our marketing solutions that are non-performance based are recognized ratably over the life of the contract commencing when they are first delivered or fulfilled. Revenues with respect to our marketing solutions that are performance-based are recognized as the service is delivered or fulfilled.

More specifically, we recognize revenue when all of the following criteria have been met:

• Persuasive evidence of an arrangement exists: This criterion is satisfied with the execution of a signed contract between the Company and our client. This contract includes specifications that must be adhered to over the term of the agreement by both parties.

• Delivery has occurred: This criterion is satisfied for our print marketing solutions when physical distribution of a given print directory is substantially complete. This criterion is satisfied for our Internet-based marketing solutions upon fulfillment.

• The fee is fixed or determinable: This criterion is satisfied with the execution of a signed contract between the Company and our client including the final negotiated price.

• Collectability is reasonably assured: This criterion is satisfied by performing credit evaluations of our clients before the signed contract is executed or by requiring our clients to prepay in full for our marketing solutions. Reasonable assurance of collection is also evidenced by a review of the client’s payment history.

Revenue and deferred revenue from the sale of advertising is recorded net of an allowance for sales claims, estimated based primarily on historical experience. We increase or decrease this estimate as information or circumstances indicate that the estimate may no longer represent the amount of claims we may incur in the future.

In September 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements, a consensus of the FASB Emerging Issues Task Force (“ASU 2009-13”). ASU 2009-13 amends the current guidance pertaining to multiple-deliverable revenue arrangements included in FASB Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition — Multiple Element Arrangements to:

• Provide updated guidance on determining whether multiple deliverables exist, how the deliverables in an arrangement should be separated, and how consideration should be allocated;

• Require an entity to allocate revenue in a multiple element arrangement using a selling price hierarchy of (1) vendor specific objective evidence of selling price (“VSOE”), if available; (2) third party evidence of selling price (“TPE”), if VSOE is not available; or (3) estimated selling price, if a vendor does not have either VSOE or TPE; and

• Eliminate the use of the residual method for revenue recognition and require an entity to allocate revenue using the relative selling price method.

The Company adopted ASU 2009-13 effective January 1, 2011 on a prospective basis. The adoption of ASU 2009-13 did not have any impact on our financial position, results of operations or cash flows.

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We enter into multiple-deliverable revenue arrangements that may include any combination of our print or Internet-based marketing solutions and that are designed specifically to meet the needs of our clients. Our print and Internet-based marketing solutions are also sold on a stand-alone basis. The timing of delivery or fulfillment of our marketing solutions in a multiple-deliverable arrangement may differ, whereby the fulfillment of Internet-based marketing solutions typically precedes delivery of our print marketing solutions due to the length of time required to produce the final print product. In addition, multiple print directories included in a multiple-deliverable arrangement may be published at different times throughout the year. We limit the amount of revenue recognized for delivered elements to the amount that is not contingent on the future delivery or fulfillment of other marketing solutions included in a multiple-deliverable arrangement. Our print and Internet-based marketing solutions are not inter-dependent. We account for multiple arrangements with a single client as one arrangement if the contractual terms and/or substance of those arrangements indicate that they may be so closely related that they are, in effect, parts of a single arrangement.

We evaluate each deliverable in a multiple-deliverable revenue arrangement to determine whether they represent separate units of accounting using the following criteria:

• The delivered item(s) has value to the customer on a stand-alone basis; and

• If the arrangement includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the Company.

All of our print and Internet-based marketing solutions qualify as separate units of accounting since they are sold on a stand-alone basis and we allocate multiple-deliverable arrangement consideration to each deliverable based on its relative selling price, which is determined using VSOE. Our sales contracts generally do not include any provisions for cancellation, termination, right of return or refunds that would significantly impact recognized revenue.

The objective of VSOE is to determine the price at which a company would transact a sale if the product or service were sold on a stand-alone basis. In determining VSOE, we require that a substantial majority of our selling prices are consistent with our normal pricing and discounting policies, which have been established by management having relevant authority, for the specific marketing solution when sold on a stand-alone basis. We ensure this consistency by performing an analysis on an annual basis or more often if necessary. In determining relative selling prices of our marketing solutions sold on a stand-alone basis, we consider, among other things, (1) the geographies in which our marketing solutions are sold, (2) economic factors, (3) local business conditions, (4) competition in our markets, (5) advertiser and consumer behavior and classifications, (6) gross margin objectives and (7) historical pricing practices. Selling prices are analyzed on a more frequent basis if changes in any of these factors have a material impact on our pricing and discounting policies. There have been no significant changes to our selling prices or methods used to determine VSOE during the three and six months ended June 30, 2011. However, we may modify our pricing and discounting policies or implement new go-to-market strategies in the future, which could result in changes in selling prices, the methodology used to determine VSOE or use of another method in the selling price hierarchy to allocate arrangement consideration. As a result, our future revenue recognition for multiple-deliverable arrangements could differ significantly from our historical results.

For multiple-deliverable arrangements entered into prior to January 1, 2011, our marketing solutions qualified as separate units of accounting and arrangement consideration was allocated to each respective deliverable based on the relative fair value method using VSOE, which was determined using the same methodology described above. Had ASU 2009-13 been effective and applied to multiple-deliverable arrangements in prior reporting periods, there would not have been any impact on revenue recognized in those periods.

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Identifiable Intangible Assets and Goodwill

The Company reviews the carrying value of goodwill, definite-lived intangible assets and other long-lived assets whenever events or circumstances indicate that their carrying amount may not be recoverable. The Company reviewed the following information, estimates and assumptions to determine if any indicators of impairment existed during the three and six months ended June 30, 2011:

• Historical financial information, including revenue, profit margins, customer attrition data and price premiums enjoyed relative to competing independent publishers;

• Long-term financial projections, including, but not limited to, revenue trends and profit margin trends;

• Intangible asset carrying values;

• Trading values of our debt and equity securities; and

• Other Company-specific information.

Based upon our announcement in May 2011 of the impending departure of our Executive Vice President and Chief Financial Officer, which subsequently occurred on July 29, 2011, the continued decline in the trading value of our debt and equity securities and revisions made to our long-term forecast, the Company concluded there were indicators of impairment as of May 31, 2011. The Company concluded there were no further triggering events to measure for impairment during the one month ended June 30, 2011.

As a result of identifying indicators of impairment, we performed an impairment test of goodwill in accordance with FASB ASC 350, Intangibles — Goodwill and Other, and an impairment recoverability test of definite-lived intangible assets and other long-lived assets in accordance with FASB ASC 360, Property, Plant and Equipment (“FASB ASC 360”), as of May 31, 2011. Our impairment tests of goodwill, definite-lived intangible assets and other long-lived assets were performed using information, estimates and assumptions noted above and further described below. The Company’s goodwill, definite-lived intangible assets and other long-lived assets have been assigned to the respective reporting unit they represent for impairment testing. As of June 30, 2011, the Company’s reporting units are RHDI, Dex Media East, Inc. (“DME Inc.”) and Dex Media West, Inc. (“DMW Inc.”).

Analysis of Definite-Lived Intangible Assets and Other Long-Lived Assets

The impairment recoverability test of our definite-lived intangible assets and other long-lived assets was performed by comparing the carrying amount of our asset groups including definite-lived intangible assets and other long-lived assets, including goodwill, to the sum of their undiscounted expected future cash flows. In accordance with FASB ASC 360, impairment exists if the sum of the undiscounted expected future cash flows is less than the carrying amount of the intangible asset, or its related group of assets, and other long-lived assets. The testing results of our definite-lived intangible assets and other long-lived assets indicated they were recoverable and thus no impairment test was required as of May 31, 2011.

The fair values of our definite-lived intangible assets and other long-lived assets, which were used in our impairment testing, were determined using unobservable inputs (Level 3 in the fair value hierarchy). The following is a summary of the methodology used in the valuation of each category of definite-lived intangible assets and other long-lived assets:

Directory Services Agreements — The Company has acquired directory services agreements through prior acquisitions. As these directory services agreements have a direct contribution to the financial performance of the business, the Company utilized the multi-period excess earnings method, which is a variant of the income approach, to assign a fair value to these assets. The multi-period excess earnings method uses a discounted cash flow model, whereby the projected cash flows of the intangible asset are computed indirectly, which means that future cash flows are projected with deductions made to recognize returns on appropriate contributory assets, leaving the excess, or residual net cash flow, as indicative of the intangible asset fair value. The multi-period excess earnings method assumes the value derived from the respective asset is greater in the earlier years and steadily declines over time.

Local and National Customer Relationships — The Company has acquired significant local and national customer relationships through prior acquisitions and has also developed significant new local and national customer relationships. These local and national customer relationships provide ongoing and repeat business for the Company. Given the direct contribution made by these local and national customer relationships to the financial performance of the business, the Company utilized the multi-period excess earnings method to assign a fair value to these assets.

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Trade Names and Trademarks - The fair value of trade names and trademarks obtained as a result of prior acquisitions was determined based on a variant of the income approach known as the “relief from royalty” method. Under this method, the trade names and trademarks are valued based on the estimated amount of royalty fee that a company would have to pay in a hypothetical arms length transaction to license the assets if they were not owned. Significant assumptions utilized to value these assets were forecasted revenue streams, estimated applicable royalty rates, applicable income tax rates and appropriate discount rates. Royalty rates were estimated based on the assessment of risk and return on investment factors of comparable transactions.

Technology, Advertising Commitments and Other — Certain of the Company’s developed software technology and content assets, which have a direct contribution to the financial performance of the business, were valued using the relief from royalty method discussed above. Other software related assets that are more focused on internal operations were valued under a cost approach, which measures the value of an asset by estimating the expenditures that would be required to replace the asset given its future service capability. Advertising Commitments and other assets were valued using the multi-period excess earnings method.

Fixed Assets - In establishing fair value of our fixed assets, we used the cost approach, where the current replacement cost of the fixed asset being appraised is adjusted for the loss in value caused by physical deterioration, functional obsolescence, and economic obsolescence. In addition to the cost approach, certain assets with an active secondary market were valued using a market approach, whereby a market-based depreciation curve was applied to the assets’ original cost.

Analysis of Goodwill

Our impairment test of goodwill was performed at the reporting unit level and involved a two-step process. The first step involved comparing the fair value of each reporting unit with the carrying amount of its assets and liabilities, including goodwill, as goodwill was specifically assigned to each of the reporting units upon our adoption of fresh start accounting in 2010. The fair value was determined by valuing the Company’s debt securities at trading value and by using a market based approach for the Company’s publicly traded common stock, which included a trailing 20-day average of the closing market price of our common stock ending May 31, 2011. The aggregate debt and equity values were used to arrive at a consolidated Business Enterprise Value (“BEV”) for the Company. Since our reporting units’ equity securities are not publicly traded, there is no observable market information for these securities. As such, for our impairment test as of May 31, 2011 we calculated a BEV for each of our reporting units using unobservable inputs (Level 3 in the fair value hierarchy) based on a discounted cash flow (“DCF”) valuation technique. The Company ensured that the sum of the individual reporting units’ BEVs was consistent with the Company’s consolidated BEV using observable market pricing.

Fair value of our reporting units was determined using a DCF analysis, which is a forward-looking valuation methodology that relates the value of an asset or business to the present value of expected future cash flows to be generated by that asset or business. Under this methodology, projected future cash flows are discounted by the business’ weighted average cost of capital (“WACC”). The WACC reflects the estimated blended rate of return that debt and equity investors would require to invest in the business based on its capital structure. The DCF calculation was based on management’s financial projections of un-levered after-tax free cash flows for the period 2011 to 2014. Long-term financial projections used in the valuation were based on specific operating and financial metrics that include, but are not limited to, customer count trends and behaviors, average spend per customer, product usage, and sales representative productivity. The forecasting process also included a review of Company, industry and macroeconomic factors including, but not limited to, achievement of future financial results, anticipated changes in general market conditions including variations in market regions, and known new business opportunities and challenges. Detailed research and forecast materials from leading industry and economic analysts were also used to form our assumptions and to provide context for the long-term financial projections. The forecasting process further included sensitivity analyses related to key Company, industry and macroeconomic variables. To capture our reporting units’ residual value beyond 2014, we used a widely accepted dividend growth model which factors in assumptions as to long term cash flow growth and the WACC. We also estimated the value of each reporting units’ beneficial tax attributes, which represent the tax amortization and net operating losses likely to be reflected in a hypothetical exit price for a reporting unit. The fair value of these tax attributes was calculated by measuring the present value of the tax savings expected to be provided relative to the taxes the Company would otherwise pay absent the availability of such attributes. These cash flows were then discounted using the determined WACC. Furthermore, the Company took into account a variety of qualitative factors in estimating the value of the tax attributes, including such factors as implementation and utilization risk.

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The Company used a WACC of 13.5% for its various DCF analyses noted above as of May 31, 2011. The WACC was determined based primarily on the Company’s actual market cost of debt and equity as well as our current capital structure. The cost of equity was measured using the widely accepted capital asset pricing model. Various key Company specific inputs used in the WACC computation were also validated by comparison to those observed within a group of publicly traded market participants.

As a result of our impairment test of goodwill, we determined that each of our reporting unit’s fair value was less than the carrying amount of its assets and liabilities, requiring us to proceed with the second step of the goodwill impairment test. In the second step of the testing process, the impairment loss was determined by comparing the implied fair value of each reporting unit’s goodwill to the recorded amount of goodwill as of May 31, 2011. Determining the implied fair value of a reporting unit requires judgment and the use of significant estimates and assumptions noted above. We believe that the estimates and assumptions used in our impairment assessments are reasonable and based on available market information, but variations in any of the assumptions could result in materially different calculations of fair value and determinations of whether or not an impairment is indicated or the amount of impairment recorded. Based upon this analysis, we determined that the remaining goodwill assigned to each of our reporting units was fully impaired and thus recognized an aggregate goodwill impairment charge of $801.1 million during the three and six months ended June 30, 2011. The goodwill impairment charge has been recorded at each of our reporting units as follows:

	Three and Six Months Ended
Reporting Unit	June 30, 2011
RHDI	$	250,518
DME Inc.		236,159
DMW Inc.		314,397
Total	$	801,074

The goodwill impairment charge had no impact on current or future operating cash flow or compliance with debt covenants.

The following table presents critical assumptions used in the valuation of the reporting units at May 31, 2011:

											Percentage By Which
							Years of Cash Flow		Reporting Unit		Reporting Unit Fair
				Terminal Growth			Before Terminal		Fair Value at May		Value Exceeds its
Reporting Unit	Discount Rate			Rate (1)			Value		31, 2011		Carrying Value
RHDI		13.5	%		(1.0	)%	4.5 years		$	855,000		0.0	%
DME Inc.		13.5	%		(1.0	)%	4.5 years			700,000		0.0	%
DMW Inc.		13.5	%		(1.0	)%	4.5 years			720,000		0.0	%
Total		—			—			—	$	2,275,000		—

⁽¹⁾ Terminal growth rate is determined by reconciling the market value of our debt and equity securities as of May 31, 2011 to the Company’s long-term financial projections.

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As of June 30, 2011, the Company has no recorded goodwill at any of its reporting units. The change in the carrying amount of goodwill since it was established in fresh start accounting as of February 1, 2010 (“Fresh Start Reporting Date”) is as follows:

Balance at February 1, 2010			$	2,097,124
Goodwill impairment charges during 2010	(1,137,623	)
Reduction in goodwill during 2010	(158,427	)
Total adjustment to goodwill during 2010				(1,296,050	)
Goodwill impairment charge during the three and six months ended June 30, 2011				(801,074	)
Balance at June 30, 2011			$	—

During the three months ended June 30, 2010, the Company concluded that there were indicators of impairment and as a result, we performed impairment tests of our goodwill, definite-lived intangible assets and other long-lived assets as of June 30, 2010. The testing results of our definite-lived intangible assets and other long-lived assets resulted in a non-goodwill intangible asset impairment charge of $17.3 million during the three and five months ended June 30, 2010 associated with trade names and trademarks, technology, local customer relationships and other from our former Business.com reporting unit. The Company also recognized a goodwill impairment charge of $752.3 million during the three and five months ended June 30, 2010 resulting from our impairment testing, which was recorded in each of our reporting units. The sum of the goodwill and non-goodwill intangible asset impairment charges totaled $769.7 million for the three and five months ended June 30, 2010. Please refer to our Quarterly Report on Form 10-Q for the period ended June 30, 2010 for additional information including estimates and assumptions used in our impairment testing.

In addition to the goodwill impairment charge recognized during the three and five months ended June 30, 2010 noted above, the Company also recognized a goodwill impairment charge of $385.3 million during the third quarter of 2010 for a total goodwill impairment charge of $1,137.6 million during the year ended December 31, 2010. During the fourth quarter of 2010, the Company recognized a reduction in goodwill of $158.4 million related to the finalization of cancellation of indebtedness income and tax attribute reduction calculations required to be performed at December 31, 2010 associated with fresh start accounting.

Other Information

Our identifiable intangible assets and their respective book values at June 30, 2011 are shown in the following table:

													Technology,
	Directory			Local			National			Trade			Advertising
	Services			Customer			Customer			Names and			Commitments
	Agreements			Relationships			Relationships			Trademarks			& Other			Total
Net intangible assets carrying value	$	1,330,000		$	560,000		$	175,000		$	380,000		$	85,500		$	2,530,500
Accumulated amortization		(118,108	)		(73,432	)		(12,110	)		(30,333	)		(11,018	)		(245,001	)
Net intangible assets at June 30, 2011	$	1,211,892		$	486,568		$	162,890		$	349,667		$	74,482		$	2,285,499

Amortization expense related to the Company’s intangible assets was $45.5 million and $83.7 million for the three and six months ended June 30, 2011, respectively, and $46.3 million and $77.1 million for the three and five months ended June 30, 2010, respectively. Amortization expense related to the Predecessor Company’s intangible assets was $15.6 million for the one month ended January 31, 2010.

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The Company evaluates the remaining useful lives of identifiable intangible assets and other long-lived assets whenever events or circumstances indicate that a revision to the remaining period of amortization is warranted. If the estimated remaining useful lives change, the remaining carrying amount of the intangible assets and other long-lived assets would be amortized prospectively over that revised remaining useful life. In conjunction with our impairment testing as of May 31, 2011, the Company evaluated the remaining useful lives of identifiable intangible assets and other long-lived assets by considering, among other things, the effects of obsolescence, demand, competition, which takes into consideration the price premium benefit we have over competing independent publishers in our markets as a result of directory services agreements acquired in prior acquisitions, and other economic factors, including the stability of the industry in which we operate, known technological advances, legislative actions that result in an uncertain or changing regulatory environment, and expected changes in distribution channels. Based on this evaluation, the Company has determined that the estimated useful lives of intangible assets presented below reflect the period they are expected to contribute to future cash flows and therefore continue to be deemed appropriate. However, revisions to our long-term forecast, which was used for our impairment testing as of May 31, 2011, had a direct impact on the timing of amortization expense associated with intangible assets that are amortized using the income forecast method. The Company anticipates an increase in amortization expense of $34.3 million and total amortization expense of $187.1 million for 2011 resulting from these changes.

The combined weighted average useful life of our identifiable intangible assets at June 30, 2011 is 21 years. The weighted average useful lives and amortization methodology for each of our identifiable intangible assets at June 30, 2011 are shown in the following table:

	Weighted Average	Amortization
Intangible Asset	Useful Lives	Methodology
Directory services agreements	26 years	Income forecast method (1)
Local customer relationships	14 years	Income forecast method (1)
National customer relationships	25 years	Income forecast method (1)
Trade names and trademarks	14 years	Straight-line method
Technology, advertising commitments and other	8 years	Income forecast method (1)

⁽¹⁾ These identifiable intangible assets are being amortized under the income forecast method, which assumes the value derived from these intangible assets is greater in the earlier years and steadily declines over time.

If industry and local business conditions in our markets deteriorate in excess of current estimates, potentially resulting in further declines in advertising sales and operating results, and / or if the trading value of our debt and equity securities continue to decline significantly, we will be required to assess once again the recoverability and useful lives of our intangible assets and other long-lived assets. These factors, including changes to assumptions used in our impairment analysis as a result of these factors, could result in future impairment charges, a reduction of remaining useful lives associated with our intangible assets and other long-lived assets and acceleration of amortization expense.

Interest Expense

Successor Company

In conjunction with our adoption of fresh start accounting and reporting on the Fresh Start Reporting Date, an adjustment was established to record our outstanding debt at fair value on the Fresh Start Reporting Date. This fair value adjustment will be amortized as an increase to interest expense over the remaining term of the respective debt agreements using the effective interest method and does not impact future scheduled interest or principal payments. Amortization of the fair value adjustment included as an increase to interest expense was $7.5 million and $14.8 million for the three and six months ended June 30, 2011, respectively, and $8.3 million and $13.9 million for the three and five months ended June 30, 2010, respectively.

During the first quarter of 2010, we entered into interest rate swap and interest rate cap agreements that are not designated as cash flow hedges. The Company’s interest expense includes expense of $0.4 million and income of $0.3 million for the three and six months ended June 30, 2011, respectively, and expense of $5.6 million and $6.7 million for the three and five months ended June 30, 2010, respectively, resulting from the change in fair value of these interest rate swaps and interest rate caps.

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Predecessor Company

Contractual interest expense that would have appeared on the Predecessor Company’s condensed consolidated statement of operations if not for the filing of the Chapter 11 petitions was $65.9 million for the one month ended January 31, 2010.

Advertising Expense

We recognize advertising expenses as incurred. These expenses include media, public relations, promotional, branding and sponsorship costs and on-line advertising. Total advertising expense for the Company was $6.7 million and $9.8 million for the three and six months ended June 30, 2011, respectively, and $6.8 million and $11.0 million for the three and five months ended June 30, 2010, respectively. Total advertising expense for the Predecessor Company was $1.0 million for the one month ended January 31, 2010.

Concentration of Credit Risk

Trade Receivables

Approximately 85% of our advertising revenues are derived from the sale of our marketing solutions to local businesses. Most new clients and clients desiring to expand their advertising programs are subject to a credit review. If the clients qualify, we may extend credit to them in the form of a trade receivable for their advertising purchase. We do not require collateral from our clients, although we do charge late fees to clients that do not pay by specified due dates. The remaining approximately 15% of our advertising revenues are derived from the sale of our marketing solutions to national or large regional chains. Substantially all of the revenues derived through national accounts are serviced through certified marketing representatives (“CMRs”) from which we accept orders. We receive payment for the value of advertising placed in our directories, net of the CMR’s commission, directly from the CMR. While we are still exposed to credit risk associated with trade receivables, the amount of credit losses from these accounts has historically been less than our credit losses on local accounts because the clients, and in some cases the CMRs, tend to be larger companies with greater financial resources than local clients. However, since the fourth quarter of 2010, our bad debt provision has been negatively impacted by delinquent balances associated with a CMR.

Derivative Financial Instruments

At June 30, 2011, we had interest rate swap and interest rate cap agreements with major financial institutions with a notional amount of $500.0 million and $400.0 million, respectively. We are exposed to credit risk in the event that one or more of the counterparties to the agreements does not, or cannot, meet their obligation. The notional amount for interest rate swaps is used to measure interest to be paid or received and does not represent the amount of exposure to credit loss. Any loss would be limited to the amount that would have been received over the remaining life of the interest rate swap agreement. Under the terms of the interest rate cap agreements, the Company will receive payments based on the spread in rates if the three-month LIBOR rate increases above the negotiated cap rates. Any loss would be limited to the amount that would have been received based on the spread in rates over the remaining life of the interest rate cap agreement. The counterparties to the interest rate swap and interest rate cap agreements are major financial institutions with credit ratings of AA- or higher, or the equivalent dependent upon the credit rating agency.

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Earnings (Loss) Per Share

The calculation of basic and diluted earnings (loss) per share (“EPS”) is presented below.

	Successor Company												Predecessor Company
	Three Months			Six Months			Three Months			Five Months			One Month
	Ended			Ended			Ended			Ended			Ended
	June 30, 2011			June 30, 2011			June 30, 2010			June 30, 2010			January 31, 2010
Basic EPS
Net income (loss)	$	(602,107	)	$	(546,698	)	$	(769,923	)	$	(512,705	)	$	6,920,009
Weighted average common shares outstanding		50,123			50,082			50,016			50,013			69,013
Basic EPS	$	(12.01	)	$	(10.92	)	$	(15.39	)	$	(10.25	)	$	100.3
Diluted EPS
Net income (loss)	$	(602,107	)	$	(546,698	)	$	(769,923	)	$	(512,705	)	$	6,920,009
Weighted average common shares outstanding		50,123			50,082			50,016			50,013			69,013
Dilutive effect of stock awards		—			—			—			—			39
Weighted average diluted shares outstanding		50,123			50,082			50,016			50,013			69,052
Diluted EPS	$	(12.01	)	$	(10.92	)	$	(15.39	)	$	(10.25	)	$	100.2

Due to the Company’s reported net loss for the three and six months ended June 30, 2011 and three and five months ended June 30, 2010, the effect of all stock-based awards was anti-dilutive and therefore not included in the calculation of diluted EPS. For both the three and six months ended June 30, 2011, 3.4 million shares of the Company’s stock-based awards had exercise prices that exceeded the average market price of the Company’s common stock for the period. For both the three and five months ended June 30, 2010, 1.0 million shares of the Company’s stock-based awards had exercise prices that exceeded the average market price of the Company’s common stock for the period. For the one month ended January 31, 2010, 4.6 million shares of the Predecessor Company’s stock-based awards had exercise prices that exceeded the average market price of the Predecessor Company’s common stock for the period.

Fair Value of Financial Instruments

At June 30, 2011 and December 31, 2010, the fair value of cash and cash equivalents, accounts receivable, net and accounts payable and accrued liabilities approximated their carrying value based on the net short-term nature of these instruments. The Company has utilized quoted market prices, where available, to compute the fair market value of our long-term debt at June 30, 2011 as disclosed in Note 5, “Long-Term Debt.” These estimates of fair value may be affected by assumptions made and, accordingly, are not necessarily indicative of the amounts the Company could realize in a current market exchange.

As required by FASB ASC 820, Fair Value Measurements and Disclosures, assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The Company had interest rate swaps with a notional amount of $500.0 million and interest rate caps with a notional amount of $400.0 million at June 30, 2011 and December 31, 2010 that are measured at fair value on a recurring basis. The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2011 and December 31, 2010, respectively, and the level within the fair value hierarchy in which the fair value measurements were included.

15

	Fair Value Measurements
	Using Significant Other Observable Inputs (Level 2)
Derivatives:	June 30, 2011			December 31, 2010
Interest Rate Swap — Liabilities	$	(5,840	)	$	(6,365	)
Interest Rate Cap — Assets	$	44		$	308

There were no transfers of assets or liabilities into or out of Level 2 as of June 30, 2011 or December 31, 2010. The Company has established a policy of recognizing transfers between levels in the fair value hierarchy as of the end of a reporting period.

Valuation Techniques — Interest Rate Swaps and Interest Rate Caps

Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date.

Fair value for our derivative instruments was derived using pricing models based on a market approach. Pricing models take into account relevant observable market inputs that market participants would use in pricing the asset or liability. The pricing models used to determine fair value for each of our derivative instruments incorporate specific contract terms for valuation inputs, including effective dates, maturity dates, interest rate swap pay rates, interest rate cap rates and notional amounts, as disclosed and presented in Note 6, “Derivative Financial Instruments,” interest rate yield curves, and the creditworthiness of the counterparty and the Company. Counterparty credit risk and the Company’s credit risk could have a material impact on the fair value of our derivative instruments, our results of operations or financial condition in a particular reporting period. At June 30, 2011, the impact of applying counterparty credit risk in determining the fair value of our derivative instruments was an increase to our derivative instruments liability of less than $0.1 million. At June 30, 2011, the impact of applying the Company’s credit risk in determining the fair value of our derivative instruments was a decrease to our derivative instruments liability of $1.2 million. Many pricing models do not entail material subjectivity because the methodologies employed do not necessitate significant judgment, and the pricing inputs are observed from actively quoted markets, as is the case for our derivative instruments. The pricing models used by the Company are widely accepted by the financial services industry. As such and as noted above, our derivative instruments are categorized within Level 2 of the fair value hierarchy.

Fair Value Control Processes— Interest Rate Swaps and Interest Rate Caps

The Company employs control processes to validate the fair value of its derivative instruments derived from the pricing models. These control processes are designed to assure that the values used for financial reporting are based on observable inputs wherever possible. In the event that observable inputs are not available, the control processes are designed to assure that the valuation approach utilized is appropriate and consistently applied and that the assumptions are reasonable.

Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and certain expenses and the disclosure of contingent assets and liabilities. Actual results could differ materially from those estimates and assumptions. Estimates and assumptions are used in the determination of recoverability of long-lived assets, sales allowances, allowances for doubtful accounts, depreciation and amortization, employee benefit plans expense, restructuring expense and accruals, deferred income taxes, certain assumptions pertaining to our stock-based awards, and certain estimates and assumptions used in our impairment evaluation of goodwill, definite-lived intangible assets and other long-lived assets, among others.

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New Accounting Pronouncements

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU 2011-05”). ASU 2011-05 allows an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity. ASU 2011-05 does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU 2011-05 should be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. As the adoption of ASU 2011-05 will only affect the reporting of information noted above, there will be no impact on our financial position and result of operations. The Company is currently evaluating the presentation alternatives noted in ASU 2011-05.

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04’). ASU 2011-04 was issued to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 clarifies the FASB’s intent about the application of existing fair value measurement and disclosure requirements, changes certain fair value measurement principles and enhances fair value disclosure requirements. ASU 2011-04 is effective for interim and annual reporting periods beginning after December 15, 2011 and will be applied prospectively. The Company does not expect the adoption of ASU 2011-04 to have an impact on our financial position and results of operations.

We have reviewed other accounting pronouncements that were issued as of June 30, 2011, which the Company has not yet adopted, and do not believe that these pronouncements will have a material impact on our financial position or operating results.

3. Reorganization Items, Net

Predecessor Company

Reorganization items directly associated with the process of reorganizing the business under Chapter 11 were recorded on a separate line item on the condensed consolidated statement of operations. The Predecessor Company had recorded $7.8 billion of reorganization items during the one month ended January 31, 2010 comprised of a $4.5 billion gain on reorganization / settlement of liabilities subject to compromise and fresh start accounting adjustments of $3.3 billion. The following table displays the details of reorganization items for the one month ended January 31, 2010:

	Predecessor Company
	One Month Ended
	January 31, 2010
Liabilities subject to compromise	$	6,352,813
Issuance of new Dex One common stock (par value)		(50	)
Dex One additional paid-in capital		(1,450,734	)
Dex One Senior Subordinated Notes		(300,000	)
Reclassified into other balance sheet liability accounts		(39,471	)
Professional fees and other		(38,403	)
Gain on reorganization / settlement of liabilities subject to compromise		4,524,155
Fresh start accounting adjustments:
Goodwill		2,097,124
Write off of deferred revenue and deferred directory costs		655,555
Fair value adjustment to intangible assets		415,132
Fair value adjustment to the amended and restated credit facilities		120,245
Fair value adjustment to fixed assets and computer software		49,814
Write-off of deferred financing costs		(48,443	)
Other fresh start accounting adjustments		(20,450	)
Total fresh start accounting adjustments		3,268,977
Total reorganization items, net	$	7,793,132

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4. Restructuring Charges

During the fourth quarter of 2010, the Company initiated a restructuring plan that includes headcount reductions, consolidation of responsibilities and vacating leased facilities (“Restructuring Actions”), which has continued into 2011. Employees impacted by the Restructuring Actions were notified of their termination during the fourth quarter of 2010 and first and second quarters of 2011. In addition, the Company vacated certain of its leased facilities during the first and second quarters of 2011. As a result of the Restructuring Actions, we have recognized a restructuring charge to earnings of $8.7 million and $14.7 million and made cash payments of $7.6 million and $16.0 million during the three and six months ended June 30, 2011, respectively, related to severance, vacating leased facilities and related restructuring activities. The following tables show the activity in our restructuring reserve associated with the Restructuring Actions during the three and six months ended June 30, 2011.

Three Months Ended June 30, 2011
Balance at March 31, 2011	$	15,413
Additions to reserve charged to earnings		8,713
Non-cash reduction in restructuring reserve		(3,005	)
Payments		(7,568	)
Balance at June 30, 2011	$	13,553
Six Months Ended June 30, 2011
Balance at January 1, 2011	$	17,858
Additions to reserve charged to earnings		14,725
Non-cash reduction in restructuring reserve		(3,005	)
Payments		(16,025	)
Balance at June 30, 2011	$	13,553

The Company anticipates additional charges to earnings related to severance, vacating leased facilities and related restructuring activities in conjunction with the Restructuring Actions during 2011. These amounts have not been determined at this time. Restructuring charges that are charged to earnings are included in production and distribution expenses, selling and support expenses or general and administrative expenses on the consolidated statements of operations, as applicable.

5. Long-Term Debt

The following table presents the fair market value of our long-term debt at June 30, 2011 based on quoted market prices on that date, as well as the carrying value of our long-term debt at June 30, 2011, which includes $76.2 million of unamortized fair value adjustments required by GAAP in connection with the Company’s adoption of fresh start accounting on the Fresh Start Reporting Date.

	Fair Market Value		Carrying Value
	June 30, 2011		June 30, 2011
RHDI Amended and Restated Credit Facility	$	658,267	$	968,040
Dex Media East Amended and Restated Credit Facility		512,658		698,854
Dex Media West Amended and Restated Credit Facility		523,428		630,097
Dex One 12%/14% Senior Subordinated Notes due 2017		126,000		300,000
Total Dex One consolidated		1,820,353		2,596,991
Less current portion		224,046		298,907
Long-term debt	$	1,596,307	$	2,298,084

RHDI Amended and Restated Credit Facility

As of June 30, 2011, the outstanding carrying value under the amended and restated RHDI credit facility (“RHDI Amended and Restated Credit Facility”) totaled $968.0 million. The RHDI Amended and Restated Credit Facility requires quarterly principal and interest payments and matures on October 24, 2014. The weighted average interest rate of outstanding debt under the RHDI Amended and Restated Credit Facility was 9.0% at June 30, 2011.

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Dex Media East Amended and Restated Credit Facility

As of June 30, 2011, the outstanding carrying value under the amended and restated Dex Media East credit facility (“Dex Media East Amended and Restated Credit Facility”) totaled $698.9 million. The Dex Media East Amended and Restated Credit Facility requires quarterly principal and interest payments and matures on October 24, 2014. The weighted average interest rate of outstanding debt under the Dex Media East Amended and Restated Credit Facility was 2.8% at June 30, 2011.

Dex Media West Amended and Restated Credit Facility

As of June 30, 2011, the outstanding carrying value under the amended and restated Dex Media West credit facility (“Dex Media West Amended and Restated Credit Facility”) totaled $630.1 million. The Dex Media West Amended and Restated Credit Facility requires quarterly principal and interest payments and matures on October 24, 2014. The weighted average interest rate of outstanding debt under the Dex Media West Amended and Restated Credit Facility was 7.0% at June 30, 2011.

Impact of Fresh Start Accounting

In conjunction with our adoption of fresh start accounting, an adjustment was established to record our outstanding debt at fair value on the Fresh Start Reporting Date. The Company was required to record our amended and restated credit facilities at a discount as a result of their fair value on the Fresh Start Reporting Date. Therefore, the carrying amount of these debt obligations is lower than the principal amount due at maturity. A total discount of $120.2 million was recorded upon adoption of fresh start accounting associated with our amended and restated credit facilities, of which $76.2 million remains unamortized at June 30, 2011, as shown in the following table.

					Outstanding Debt at
			Unamortized Fair		June 30, 2011 Excluding the
	Carrying Value at		Value Adjustments		Impact of Unamortized Fair
	June 30, 2011		at June 30, 2011		Value Adjustments
RHDI Amended and Restated Credit Facility	$	968,040	$	12,463	$	980,503
Dex Media East Amended and Restated Credit Facility		698,854		54,121		752,975
Dex Media West Amended and Restated Credit Facility		630,097		9,612		639,709
Dex One 12%/14% Senior Subordinated Notes due 2017		300,000		—		300,000
Total	$	2,596,991	$	76,196	$	2,673,187

6. Derivative Financial Instruments

We do not use derivative financial instruments for trading or speculative purposes and our derivative financial instruments are limited to interest rate swap and interest rate cap agreements. The Company utilizes a combination of fixed rate debt and variable rate debt to finance its operations. The variable rate debt exposes the Company to variability in interest payments due to changes in interest rates. Management believes that it is prudent to mitigate the interest rate risk on a portion of its variable rate borrowings. To satisfy our objectives and requirements, the Company has entered into interest rate swap and interest rate cap agreements, which have not been designated as cash flow hedges, to manage our exposure to interest rate fluctuations on our variable rate debt.

All derivative financial instruments are recognized as either assets or liabilities on the condensed consolidated balance sheets with measurement at fair value. On a quarterly basis, the fair values of our interest rate swaps and interest rate caps are determined based on observable inputs. These derivative instruments have not been designated as cash flow hedges and as such, the initial fair value and any subsequent gains or losses on the change in the fair value of the interest rate swaps and interest rate caps are reported in earnings as a component of interest expense. Any gains or losses related to the quarterly fair value adjustments are presented as a non-cash operating activity on the condensed consolidated statements of cash flows.

19

By using derivative financial instruments to hedge exposures to changes in interest rates, the Company exposes itself to credit risk and market risk. Credit risk is the possible failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty and, therefore, it is not subject to credit risk. The Company minimizes the credit risk in derivative financial instruments by entering into transactions with major financial institutions with credit ratings of AA- or higher, or the equivalent dependent upon the credit rating agency.

Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

See Note 2, “Summary of Significant Accounting Policies — Fair Value of Financial Instruments” for additional information regarding our interest rate swaps and interest rate caps.

Successor Company

The Company has entered into the following interest rate swaps that effectively convert $500.0 million, or approximately 22%, of the Company’s variable rate debt to fixed rate debt as of June 30, 2011. Since the RHDI Amended and Restated Credit Facility and the Dex Media West Amended and Restated Credit Facility are subject to a LIBOR floor of 3.00% and the LIBOR rate is below that floor at June 30, 2011, both credit facilities are effectively fixed rate debt until such time LIBOR exceeds the stated floor. At June 30, 2011, approximately 88% of our total debt outstanding consisted of variable rate debt, excluding the effect of our interest rate swaps, the LIBOR floors and interest rate caps, which are discussed below. Including the effect of our interest rate swaps, total fixed rate debt comprised approximately 31% of our total debt portfolio as of June 30, 2011. The interest rate swaps mature at varying dates from February 2012 through February 2013.

Interest Rate Swaps — Dex Media East

Effective Dates	Notional Amount			Pay Rates			Maturity Dates
(amounts in millions)
February 26, 2010	$	300	(2)		1.20% - 1.796	%	February 29, 2012 — February 28, 2013
March 5, 2010		100	(1)		1.688	%	January 31, 2013
March 10, 2010		100	(1)		1.75	%	January 31, 2013
Total	$	500

Under the terms of the interest rate swap agreements, we receive variable interest based on the three-month LIBOR and pay a weighted average fixed rate of 1.5%. The weighted average rate received on our interest rate swaps was 0.3% for the six months ended June 30, 2011. These periodic payments and receipts are recorded as interest expense.

Under the terms of the interest rate cap agreements, the Company will receive payments based on the spread in rates if the three-month LIBOR rate increases above the cap rates noted in the table below. The Company paid $2.1 million for the interest rate cap agreements entered into during the first quarter of 2010. We are not required to make any future payments related to these interest rate cap agreements.

Interest Rate Caps — RHDI

Effective Dates	Notional Amount			Cap Rates			Maturity Dates
(amounts in millions)
February 26, 2010	$	200	(3)		3.0% - 3.5	%	February 29, 2012 — February 28, 2013
March 8, 2010		100	(4)		3.5	%	January 31, 2013
March 10, 2010		100	(4)		3.0	%	April 30, 2012
Total	$	400

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(1)	Consists of one swap
(2)	Consists of three swaps
(3)	Consists of two caps
(4)	Consists of one cap

The following tables present the fair value of our interest rate swaps and interest rate caps at June 30, 2011 and December 31, 2010. The fair value of our interest rate swaps is presented in accounts payable and accrued liabilities and other non-current liabilities and the fair value of our interest rate caps is presented in prepaid expenses and other current assets and other non-current assets on the condensed consolidated balance sheet at June 30, 2011 and December 31, 2010. The following tables also present the (gain) loss recognized in interest expense from the change in fair value of our interest rate swaps and interest rate caps for the three and six months ended June 30, 2011 and three and five months ended June 30, 2010.

							(Gain) Loss Recognized in
							Interest Expense
							From the Change in Fair Value of
							Interest Rate Swaps
							Three Months			Six Months			Three Months		Five Months
	Fair Value Measurements at						Ended			Ended			Ended		Ended
Interest Rate Swaps	June 30, 2011			December 31, 2010			June 30, 2011			June 30, 2011			June 30, 2010		June 30, 2010
Other non-current assets	$	—		$	—		$	—		$	—		$	2,511	$	—
Accounts payable and accrued liabilities		(4,162	)		(4,376	)		(181	)		(214	)		294		3,428
Other non-current liabilities		(1,678	)		(1,989	)		508			(311	)		1,642		1,642
Total	$	(5,840	)	$	(6,365	)	$	327		$	(525	)	$	4,447	$	5,070

					Loss Recognized in
					Interest Expense
					From the Change in Fair Value of
					Interest Rate Caps
					Three Months		Six Months		Three Months		Five Months
	Fair Value Measurements at				Ended		Ended		Ended		Ended
Interest Rate Caps	June 30, 2011		December 31, 2010		June 30, 2011		June 30, 2011		June 30, 2010		June 30, 2010
Prepaid expenses and other current assets	$	2	$	5	$	—	$	3	$	23	$	66
Other non-current assets		42		303		119		261		1,091		1,520
Total	$	44	$	308	$	119	$	264	$	1,114	$	1,586

The Company recognized losses related to our interest rate swaps and interest rate caps into earnings, including accrued interest, of $2.0 million and $2.8 million during the three and six months ended June 30, 2011, respectively, and $7.1 million and $8.7 million during the three and five months ended June 30, 2010 , respectively.

Predecessor Company

During the one month ended January 31, 2010, the Predecessor Company recognized a loss to interest expense of $2.3 million associated with the change in fair value of interest rate swaps. In addition, the Predecessor Company recognized $3.0 million of losses related to interest rate swaps into earnings, including accrued interest, during the one month ended January 31, 2010.

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7. Income Taxes

Successor Company

Our quarterly income tax (provision) benefit for income taxes is measured using an estimated annual effective tax rate for the period, adjusted for discrete items that occurred within the periods presented. For the three and six months ended June 30, 2011, we recorded an income tax benefit of $163.7 million and $143.5 million, respectively, which represents an effective tax rate of 21.4% and 20.8%, respectively. The effective tax rate for the three and six months ended June 30, 2011 differs from the federal statutory rate of 35.0% primarily due to non-deductible goodwill impairment, changes in deferred tax liabilities related to the stock basis of subsidiaries, changes in recorded valuation allowances and decreases in the liability for unrecognized tax benefits.

The Company recorded a goodwill impairment charge of $801.1 million for the three and six months ended June 30, 2011, of which $457.2 million related to non-deductible goodwill. Impairment of non-deductible goodwill reduced the income tax benefit of the impairment by $174.1 million and reduced our effective tax rate by approximately 22.7% and 25.2% for the three and six months ended June 30, 2011, respectively.

Upon emergence from bankruptcy, the Company recorded deferred tax liabilities related to the excess of the financial statement carrying amount over the tax basis of investments in certain subsidiaries. The estimated annual effective tax rate for the current year includes an estimate of the change in these deferred tax liabilities for the year. The goodwill impairment charge reduced the financial statement carrying amount of investments in certain subsidiaries, which caused a reduction in these deferred tax liabilities. The resulting reduction in income tax expense for the three and six months ended June 30, 2011 relating to the change in these deferred tax liabilities was $72.5 million and $78.9 million, respectively, which increased the effective tax rate for the three and six months ended June 30, 2011 by approximately 9.5% and 11.4%, respectively.

The estimated annual effective tax rate for the current year includes an estimate of the valuation allowance expected to be necessary at the end of the year for originating deferred tax assets. The goodwill impairment charge gave rise to a deferred tax asset whose realization did not meet a more-likely-than-not threshold, requiring a valuation allowance. The resulting increase in income tax expense for the three and six months ended June 30, 2011 relating to the change in valuation allowance is $47.2 million and $46.6 million, respectively, which reduced the effective tax rate for the three and six months ended June 30, 2011 by approximately 6.2% and 6.8%, respectively.

During the three months ended June 30, 2011, the federal statute of limitations relating to a previously unrecognized tax position for revenue recognition closed. The Company has decreased its liability for unrecognized tax benefits associated with this federal and state uncertain tax position by $28.2 million and recorded a net tax benefit of $24.0 million for both the three and six months ended June 30, 2011, respectively, which increased the effective tax rate for the three and six months ended June 30, 2011 by approximately 3.1% and 3.5%, respectively.

For the three and five months ended June 30, 2010, we recorded an income tax benefit of $157.0 million and $558.6 million, respectively, which represents an effective tax rate of 16.9% and 52.1%, respectively. As a result of the goodwill and non-goodwill intangible asset impairment charges during the three and five months ended June 30, 2010, we recognized a non-deductible adjustment to our effective tax rate of $201.8 million for the three and five months ended June 30, 2010.

Internal Revenue Code Section 382 (“Section 382”) imposes limitations on the availability of net operating losses and other corporate tax attributes as ownership changes occur. Under Section 382, potential limitations are triggered when there has been an ownership change, which is generally defined as a greater than 50% change in stock ownership (by value) over a three-year prescribed testing period. Such change in ownership will restrict the Company’s ability to use certain net operating losses and other corporate tax attributes in the future. However, the ownership change does not constitute a change in control under any of the Company’s debt agreements or other contracts. The Company experienced an ownership change in March 2009.

Based upon the closing of the SEC filing period for Schedules 13-G and review of these schedules filed through February 15, 2010, the Company determined that, more likely than not, a certain “check-the-box” election was effective prior to the date of the 2009 ownership change under Section 382. As a result, the Company recorded a tax benefit for the reversal of a liability for unrecognized tax benefit of $351.9 million in the condensed consolidated statement of operations for the five months ended June 30, 2010, which was the primary driver of our effective tax rate for the period.

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Predecessor Company

For the one month ended January 31, 2010, the Predecessor Company recorded an income tax provision of $(917.5) million which represents an effective tax rate of 11.7%.

8. Benefit Plans

The following tables provide the components of the Company’s net periodic benefit (credit) cost for the three and six months ended June 30, 2011 and three and five months ended June 30, 2010 and the Predecessor Company’s net periodic benefit (credit) for the one month ended January 31, 2010.

	Pension Benefits
													Predecessor
	Successor Company												Company
	Three Months			Six Months			Three Months			Five Months			One Month
	Ended			Ended			Ended			Ended			Ended
	June 30, 2011			June 30, 2011			June 30, 2010			June 30, 2010			January 31, 2010
Interest cost	$	3,164		$	6,354		$	3,425		$	5,660		$	1,124
Expected return on plan assets		(3,727	)		(7,250	)		(3,328	)		(5,751	)		(1,385	)
Settlement loss		403			403			—			—			—
Curtailment gain		—			—			(3,754	)		(3,754	)		—
Amortization of prior service cost		—			—			—			—			81
Amortization of net loss		—			—			—			—			122
Net periodic benefit (credit)	$	(106	)	$	(493	)	$	(3,657	)	$	(3,845	)	$	(58	)

	Postretirement Benefits
											Predecessor
	Successor Company										Company
	Three Months			Six Months			Three Months		Five Months		One Month
	Ended			Ended			Ended		Ended		Ended
	June 30, 2011			June 30, 2011			June 30, 2010		June 30, 2010		January 31, 2010
Interest cost	$	6		$	12		$	28	$	53	$	10
Amortization of net gain		(192	)		(192	)		—		—		(21	)
Net periodic benefit (credit) cost	$	(186	)	$	(180	)	$	28	$	53	$	(11	)

On May 31, 2011, settlements of Dex Media’s pension plan occurred. 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 expense for the period. These settlements resulted in recognition of an actuarial loss of $0.4 million for the three and six months ended June 30, 2011. Pension expense for Dex Media’s pension plan was recomputed based on assumptions as of May 31, 2011 including a decrease in the discount rate from 5.06% at December 31, 2010 to 4.95%. The Company utilized an outsource provider’s yield curve to determine the appropriate discount rate based on the plan’s expected future cash flows.

During the three and five months ended June 30, 2010, we recognized a curtailment gain of $3.8 million associated with the retirement of our former Chairman and Chief Executive Officer.

The Company made contributions to its pension plans of $1.4 million and $12.8 million during the three and six months ended June 30, 2011, respectively, and $1.2 million and $7.4 million during the three and five months ended June 30, 2010, respectively. The Predecessor Company did not make any contributions to its pension plans during the one month ended January 31, 2010.

The Company made net contributions to its postretirement plans of less than $0.1 million and $0.4 million during the three and six months ended June 30, 2011, respectively, and $1.4 million and $2.2 million during the three and five months ended June 30, 2010, respectively. During the one month ended January 31, 2010, the Predecessor Company made net contributions of $0.4 million to its postretirement plans. We expect to make total net contributions of approximately $16.7 million and $1.1 million to our pension plans and postretirement plans, respectively, in 2011.

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9. Business Segments

Management reviews and analyzes its business of providing marketing solutions as one operating segment.

10. Legal Proceedings

We are subject to various lawsuits, claims, and regulatory and administrative proceedings arising out of our business covering matters such as general commercial, governmental regulations, intellectual property, employment, tax and other actions. In the opinion of management, the ultimate resolution of these matters will not have a material adverse effect on our results of operations, cash flows or financial position.

11. Other Information

On February 14, 2011, we completed the sale of substantially all net assets of Business.com, including long-lived assets, domain names, trademarks, brands, intellectual property, related content and technology platform. As a result, we recognized a gain on the sale of these assets of $13.4 million during the six months ended June 30, 2011.

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

Forward-Looking Information

Certain statements contained in this Quarterly Report on Form 10-Q regarding Dex One Corporation and its direct and indirect wholly-owned subsidiaries (“Dex One,” the “Successor Company,” the “Company,” “Parent Company,” “we,” “us” and “our”) future operating results, performance, business plans or prospects and any other statements not constituting historical fact are “forward-looking statements” subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Where possible, words such as “believe,” “expect,” “anticipate,” “should,” “will,” “would,” “planned,” “estimated,” “potential,” “goal,” “outlook,” “may,” “predicts,” “could,” or the negative of those words and other comparable expressions, are used to identify such forward-looking statements. All forward-looking statements reflect our current beliefs and assumptions with respect to our future results, business plans and prospects, based on information currently available to us and are subject to significant risks and uncertainties. Accordingly, these statements are subject to significant risks and uncertainties and our actual results, business plans and prospects could differ significantly from those expressed in, or implied by, these statements. We caution readers not to place undue reliance on, and we undertake no obligation to update, other than as imposed by law, any forward-looking statements. Such risks, uncertainties and contingencies include, but are not limited to, statements about Dex One’s future financial and operating results, our plans, objectives, expectations and intentions and other statements that are not historical facts. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: (1) the continuing decline in the use of print directories; (2) increased competition, particularly from existing and emerging online technologies; (3) ongoing weak economic conditions and continued decline in advertising sales; (4) our ability to collect trade receivables from customers to whom we extend credit; (5) our ability to generate sufficient cash to service our debt; (6) our ability to comply with the financial covenants contained in our debt agreements and the potential impact to operations and liquidity as a result of restrictive covenants in such debt agreements; (7) our ability to refinance or restructure our debt on reasonable terms and conditions as might be necessary from time to time; (8) increasing interest rates; (9) changes in the Company’s and the Company’s subsidiaries credit ratings; (10) changes in accounting standards; (11) regulatory changes and judicial rulings impacting our business; (12) adverse results from litigation, governmental investigations or tax related proceedings or audits; (13) the effect of labor strikes, lock-outs and negotiations; (14) successful realization of the expected benefits of acquisitions, divestitures and joint ventures; (15) our ability to maintain agreements with CenturyLink and AT&T and other major Internet search and local media companies; (16) our reliance on third-party vendors for various services; and (17) other events beyond our control that may result in unexpected adverse operating results. Additional risks and uncertainties are described in detail in Part I — Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2010.

Dex One became the successor registrant to R.H. Donnelley Corporation (“RHD” or the “Predecessor Company”) upon emergence from Chapter 11 relief under Title 11 of the United States Code (“Chapter 11”) on January 29, 2010 (the “Effective Date”). References to the Predecessor Company in this Quarterly Report on Form 10-Q pertain to periods prior to the Effective Date.

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In conjunction with our restructuring plan that commenced during the fourth quarter of 2010 and the resulting changes in our organizational structure, certain prior period amounts included in the unaudited condensed consolidated statements of operations have been reclassified to conform to the current period’s presentation.

Recent Trends and Developments Related to Our Business

Results of Operations

As discussed in “Results of Operations” below, we have been experiencing lower advertising sales primarily as a result of declines in new and recurring business, including both renewal and incremental sales to existing advertisers, mainly driven by (1) customer attrition, (2) declines in overall advertising spending by our clients, (3) the significant impact of the weak local business conditions on consumer spending in our clients’ markets and (4) an increase in competition and more fragmentation in local business search. This was evidenced by the continued decline in our net revenues and cash flows for the three and six months ended June 30, 2011 as compared to the prior corresponding periods, apart from the impact on net revenues as a result of fresh start accounting that is discussed below.

The Company currently projects that these challenging conditions will continue for the foreseeable future, and, as such, our advertising sales, operating results, cash flow and liquidity will continue to be adversely impacted. Therefore, the Company’s historical operating results will not be indicative of future operating performance, although our long-term financial forecast currently anticipates a gradual improvement in local business conditions in our clients’ markets by the end of 2012.

As more fully described below in “Results of Operations — Net Revenues,” our method of recognizing revenue under the deferral and amortization method results in delayed recognition of advertising sales whereby recognized revenues reflect the amortization of advertising sales consummated in prior periods as well as advertising sales consummated in the current period. Accordingly, the Company’s projected decline in advertising sales will result in a decline in revenue recognized in future periods. In addition, improvements in local business conditions that are anticipated in our long-term financial forecast noted above will not have a significant immediate impact on our revenues.

Our Plan

As more fully described in Part I — Item 1, “Business” of our Annual Report on Form 10-K for the year ended December 31, 2010, we are a marketing solutions company that helps local businesses generate leads and manage their presence among consumers in the ever changing, complex and fragmented markets we serve. Our proprietary marketing solutions include our Dex published yellow pages directories, our Internet yellow pages site, DexKnows.com ^® and our mobile application, Dex Mobile ^®. Our digital affiliate marketing solutions are powered by our search engine marketing product, DexNet™, which extends our clients’ reach to our leading Internet and mobile partners to attract consumers searching for local products and services within our markets.

In response to the challenges noted above, we are working to improve the value we deliver to our clients by expanding the number of platforms and media through which we deliver their message to consumers. Our growing list of marketing solutions includes local business and market analysis, message and image creation, target market identification, advertising and digital profile creation, keyword and search engine optimization strategies and programs, distribution strategies, social strategies, voice search platforms and tracking and reporting. We continue to invest in our future through initiatives such as sales force automation, a client self-service system and portal and training and development of our locally based marketing consultants. We have opened a new client contact center in Overland Park, Kansas, which will help ensure we are able to get the right resource in front of the right clients and prospects and secure our local relationships by focusing on selling the value provided to local businesses through these expanded platforms. As local business conditions recover in our markets, we believe these investments will help us drive future revenue.

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We also continue to actively manage expenses and are considering and acting upon various initiatives and opportunities to streamline operations and reduce our cost structure. We commenced our most significant initiative during the fourth quarter of 2010 by implementing a restructuring plan that realigns internal resources to better support our base of business and ensure we have an organizational structure that is optimized to compete in a rapidly evolving marketplace. This restructuring plan, which has continued into 2011, includes headcount reductions, consolidation of responsibilities and vacating leased facilities. As a result of this restructuring plan, the Company recorded a restructuring charge to earnings of $18.6 million during the fourth quarter of 2010 related to severance of which $0.7 million was paid in cash. During the three and six months ended June 30, 2011, the Company recorded an additional restructuring charge to earnings of $8.7 million and $14.7 million, respectively, and made cash payments of $7.6 million and $16.0 million, respectively, related to severance, vacating leased facilities and related restructuring activities. The Company anticipates additional charges to earnings and cash payments related to severance, vacating leased facilities and related restructuring activities in conjunction with this restructuring plan during the remainder of 2011. These amounts have not been determined at this time. See Item 1, “Financial Statements (Unaudited)” — Note 4, “Restructuring Charges” for additional information.

Liquidity and Going Concern Analysis

As more fully described below in “Liquidity and Capital Resources,” the Company’s primary sources of liquidity are existing cash on hand and cash flows generated from operations and our primary liquidity requirements are to fund operations and service our indebtedness. The Company’s projected decline in advertising sales will result in a decline in cash flows in future periods. In addition, while improvements in local business conditions are anticipated in our long-term financial forecast as noted above, these improvements will not have a significant impact on our cash flows. However, despite the projected decline in advertising sales and cash flows, as a result of our emergence from the Chapter 11 proceedings and the restructuring of the Predecessor Company’s outstanding debt and based on current financial projections, the Company expects to be able to continue to generate cash flows from operations in amounts sufficient to fund operations and meet debt service requirements for at least the next 12-15 months. The Company’s goodwill impairment charge during the three and six months ended June 30, 2011 noted below does not affect our ability to continue as a going concern, as we are permitted to exclude such charges from debt covenant evaluations.

Impairment Analysis

The Company reviews the carrying value of goodwill, definite-lived intangible assets and other long-lived assets whenever events or circumstances indicate that their carrying amount may not be recoverable. Based upon our announcement in May 2011 of the impending departure of our Executive Vice President and Chief Financial Officer, which subsequently occurred on July 29, 2011, the continued decline in the trading value of our debt and equity securities and revisions made to our long-term forecast, the Company concluded there were indicators of impairment as of May 31, 2011. As a result, we performed impairment tests of our goodwill, definite-lived intangible assets and other long-lived assets as of May 31, 2011. The impairment testing results for recoverability of our definite-lived intangible assets and other long-lived assets indicated they were recoverable and thus no impairment test was required as of May 31, 2011. Based upon the testing results of our goodwill, we determined that the remaining goodwill assigned to each of our reporting units was fully impaired and thus recognized an aggregate goodwill impairment charge of $801.1 million during the three and six months ended June 30, 2011, which was recorded at each of our reporting units. As of June 30, 2011, the Company has no recorded goodwill at any of its reporting units. See Item 1, “Financial Statements (Unaudited)” — Note 2, “Summary of Significant Accounting Policies - Identifiable Intangible Assets and Goodwill” for additional information. See “Results of Operations - Factors Affecting Comparability” below for the Company’s presentation of Non-GAAP adjusted results for 2011.

If industry and local business conditions in our markets deteriorate in excess of current estimates, potentially resulting in further declines in advertising sales and operating results, and / or if the trading value of our debt and equity securities continue to decline significantly, we will be required to assess once again the recoverability and useful lives of our intangible assets and other long-lived assets. These factors, including changes to assumptions used in our impairment analysis as a result of these factors, could result in future impairment charges, a reduction of remaining useful lives associated with our intangible assets and other long-lived assets and acceleration of amortization expense.

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Fresh Start Accounting

The Company adopted fresh start accounting and reporting on February 1, 2010 (“Fresh Start Reporting Date”). Our net revenues and operating results were significantly impacted during 2010 by our adoption of fresh start accounting on the Fresh Start Reporting Date. See “Results of Operations — Factors Affecting Comparability” below for additional information on the impact of fresh start accounting and the Company’s presentation of Non-GAAP adjusted and combined adjusted results for 2010.

Climate Change

There is a growing concern about global climate change and the emissions of carbon dioxide. This concern has led to the possibility of federal climate change legislation as well as litigation relating to greenhouse gas emissions. While we cannot predict the impact of any proposed legislation until final, we do not believe current regulation or litigation related to global climate change is likely to have a material impact on our business, future financial position, results of operations and cash flow. Accordingly, our current financial projections do not include any impact of climate change regulation or litigation.

Healthcare Reform Legislation

During March 2010, the Patient Protection and Affordable Care Act and the Healthcare and Education Reconciliation Act of 2010 were signed into law. There has been no significant impact on our financial position, results of operations or cash flows as a result of this new legislation and we do not anticipate any significant impact in the foreseeable future.

Segment Reporting

Management reviews and analyzes its business of providing marketing solutions as one operating segment.

New Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU 2011-05”). ASU 2011-05 allows an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity. ASU 2011-05 does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU 2011-05 should be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. As the adoption of ASU 2011-05 will only affect the reporting of information noted above, there will be no impact on our financial position and result of operations. The Company is currently evaluating the presentation alternatives noted in ASU 2011-05.

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04’). ASU 2011-04 was issued to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 clarifies the FASB’s intent about the application of existing fair value measurement and disclosure requirements, changes certain fair value measurement principles and enhances fair value disclosure requirements. ASU 2011-04 is effective for interim and annual reporting periods beginning after December 15, 2011 and will be applied prospectively. The Company does not expect the adoption of ASU 2011-04 to have an impact on our financial position and results of operations.

We have reviewed other accounting pronouncements that were issued as of June 30, 2011, which the Company has not yet adopted, and do not believe that these pronouncements will have a material impact on our financial position or operating results.

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RESULTS OF OPERATIONS

Factors Affecting Comparability

Fresh Start Accounting Adjustments — Non-GAAP Analysis

The Company adopted fresh start accounting and reporting on the Fresh Start Reporting Date. The financial statements as of the Fresh Start Reporting Date report the results of Dex One with no beginning retained earnings or accumulated deficit. Any presentation of Dex One represents the financial position and results of operations of a new reporting entity and is not comparable to prior periods presented by the Predecessor Company. The financial statements for periods ended prior to the Fresh Start Reporting Date do not include the effect of any changes in the Predecessor Company’s capital structure or changes in the fair value of assets and liabilities as a result of fresh start accounting.

As a result of the deferral and amortization method of revenue recognition, recognized gross advertising revenues reflect the amortization of advertising sales consummated in prior periods as well as in the current period. The adoption of fresh start accounting had a significant impact on the financial position and results of operations of the Company commencing on the Fresh Start Reporting Date. Consistent with the Predecessor Company’s historical application of the purchase method of accounting for business combinations included in FASB Accounting Standards Codification (“ASC”) 805, Business Combinations, fresh start accounting precluded us from recognizing advertising revenue and certain expenses associated with advertising sales fulfilled prior to the Fresh Start Reporting Date. Thus, our reported results for the three and five months ended June 30, 2010 were not indicative of our underlying operating and financial performance and are not comparable to any current period presentation. The adoption of fresh start accounting did not have any impact on cash flows from operations.

Accordingly, management has provided a non-GAAP analysis below that compares the Company’s (1) GAAP results for the three months ended June 30, 2011 to Non-GAAP Adjusted Results for the three months ended June 30, 2010 and (2) GAAP results for the six months ended June 30, 2011 to Non-GAAP Combined Adjusted Results for the six months ended June 30, 2010 for net revenues through depreciation and amortization expenses on the condensed consolidated statements of operations. Non-GAAP Adjusted Results adjusts GAAP results of the Company for the three months ended June 30, 2010 to (i) eliminate the fresh start accounting impact on revenue and certain related expenses noted above and (ii) exclude cost-uplift recorded under fresh start accounting. Non-GAAP Combined Adjusted Results (1) combines GAAP results of the Company for the five months ended June 30, 2010 and GAAP results of the Predecessor Company for the one month ended January 31, 2010 and (2) adjusts these combined amounts to (i) eliminate the fresh start accounting impact on revenue and certain related expenses noted above and (ii) exclude cost-uplift recorded under fresh start accounting. Deferred directory costs that are included in prepaid expenses and other current assets on the consolidated balance sheet, such as print, paper, distribution and commissions, relate to directories that have not yet been published. Deferred directory costs have been recorded at fair value, determined as (a) the estimated billable value of the published directory less (b) the expected costs to complete the directory, plus (c) a normal profit margin. This incremental fresh start accounting adjustment to step up the recorded value of the deferred directory costs to fair value is hereby referred to as “cost-uplift.” Cost-uplift has been amortized over the terms of the applicable directories, not to exceed twelve months, and has been allocated between production and distribution expenses and selling and support expenses based upon the category of the deferred directory costs that were fair valued. Fresh start accounting had an immaterial impact on our results of operations for the three and six months ended June 30, 2011 and therefore, we have not adjusted our GAAP results for this period in the non-GAAP analysis below.

Management believes that the presentation of Non-GAAP Adjusted and Combined Adjusted Results will help financial statement users better understand the material impact fresh start accounting had on the Company’s results of operations for the three and five months ended June 30, 2010 and also offers a non-GAAP normalized comparison to GAAP results of the Company for the three and six months ended June 30, 2011. The Non-GAAP Adjusted and Combined Adjusted Results presented below are reconciled to the most comparable GAAP measures. While the Non-GAAP Adjusted and Combined Adjusted Results exclude the effects of fresh start accounting, it must be noted that the Non-GAAP Adjusted and Combined Adjusted Results are not comparable to the Company’s GAAP results for the three and six months ended June 30, 2011 and should not be treated as such.

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Impairment Charges — Non-GAAP Analysis

The Company has removed the goodwill impairment charge totaling $801.1 million from GAAP results for the three and six months ended June 30, 2011. Therefore, we are presenting non-GAAP adjusted results for impairment charges and operating income (loss) on the condensed consolidated statements of operations for these periods below. The Company has removed the goodwill and non-goodwill intangible asset impairment charges totaling $769.7 million from Non-GAAP Adjusted and Combined Adjusted Results for the three and six months ended June 30, 2010.

GAAP Analysis

Management has also provided a separate GAAP analysis for line items below operating income (loss) on the condensed consolidated statements of operations for each reporting period presented. Management believes these line items should not be combined or compared for the non-GAAP analysis based upon distinct differences in their composition between the Successor Company and Predecessor Company and the reporting periods presented. Please refer to our Quarterly Report on Form 10-Q for the period ended June 30, 2010 for a separate GAAP analysis of net revenues through operating income (loss) for the three and five months ended June 30, 2010 and one month ended January 31, 2010, respectively.

GAAP Results (Net Revenues Through Depreciation and Amortization Expenses) and Non-GAAP Adjusted Results (Impairment Charges and Operating Income (Loss)) for the Three and Six Months Ended June 30, 2011 compared to Non-GAAP Adjusted and Combined Adjusted Results for the Three and Six Months Ended June 30, 2010

Net Revenues

The components of our GAAP net revenues for the three and six months ended June 30, 2011 and non-GAAP adjusted and combined adjusted net revenues for the three and six months ended June 30, 2010 were as follows:

	Successor			Successor						Non-GAAP
	Company			Company						Adjusted
	Three			Three						Three
	Months			Months						Months
	Ended			Ended						Ended
	June 30,			June 30,			Fresh Start			June 30,
(amounts in millions)	2011			2010			Adjustments			2010			$ Change			% Change
Gross advertising revenues	$	375.8		$	158.4		$	294.0	(1)	$	452.4		$	(76.6	)		(16.9	)%
Sales claims and allowances		(4.0	)		(1.6	)		(5.1	)(1)		(6.7	)		2.7			40.3
Net advertising revenues		371.8			156.8			288.9			445.7			(73.9	)		(16.6	)
Other revenues		5.5			4.1			2.0	(1)		6.1			(0.6	)		(9.8	)
Total	$	377.3		$	160.9		$	290.9		$	451.8		$	(74.5	)		(16.5	)%

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													Non-GAAP
	Successor			Successor			Predecessor						Combined
	Company			Company			Company						Adjusted
	Six			Five			One						Six
	Months			Months			Month						Months
	Ended			Ended			Ended						Ended
	June 30,			June 30,			January			Fresh Start			June 30,
(amounts in millions)	2011			2010			31, 2010			Adjustments			2010			$ Change			% Change
Gross advertising revenues	$	766.4		$	211.7		$	161.4		$	551.9	(1)	$	925.0		$	(158.6	)		(17.1	)%
Sales claims and allowances		(8.7	)		(4.2	)		(3.5	)		(9.7	)(1)		(17.4	)		8.7			50.0
Net advertising revenues		757.7			207.5			157.9			542.2			907.6			(149.9	)		(16.5	)
Other revenues		10.8			6.5			2.5			3.8	(1)		12.8			(2.0	)		(15.6	)
Total	$	768.5		$	214.0		$	160.4		$	546.0		$	920.4		$	(151.9	)		(16.5	)%

⁽¹⁾ Represents gross advertising revenues, sales claims and allowances and other revenues for advertising sales fulfilled prior to the Fresh Start Reporting Date, which would have been recognized during the three and five months ended June 30, 2010 absent our adoption of fresh start accounting required under GAAP.

Our advertising revenues are earned primarily from the sale of advertising in yellow pages directories we publish. Advertising revenues also include revenues from our Internet-based marketing solutions including online directories, such as DexKnows.com and DexNet. Advertising revenues are affected by several factors, including changes in the quantity, size and characteristics of advertisements, acquisition of new clients, renewal rates of existing clients, premium advertisements sold, changes in advertisement pricing, the introduction of new marketing solutions, an increase in competition and more fragmentation in the local business search market and general economic factors. Revenues with respect to print advertising and Internet-based marketing solutions that are sold with print advertising are recognized under the deferral and amortization method whereby revenues are initially deferred when a directory is published, net of sales claims and allowances, and recognized ratably over the directory’s life, which is typically 12 months. Revenues with respect to Internet-based marketing solutions that are sold standalone, such as DexNet, are recognized ratably over the life of the contract commencing when they are first delivered or fulfilled. Revenues with respect to our marketing solutions that are non-performance based are recognized ratably over the life of the contract commencing when they are first delivered or fulfilled. Revenues with respect to our marketing solutions that are performance-based are recognized as the service is delivered or fulfilled.

GAAP gross advertising revenues for the three and six months ended June 30, 2011 decreased $76.6 million, or 16.9%, and $158.6 million, or 17.1%, from non-GAAP adjusted and combined adjusted gross advertising revenues for the three and six months ended June 30, 2010, respectively. The decline in GAAP gross advertising revenues for the three and six months ended June 30, 2011 is primarily due to declines in advertising sales over the past twelve months, primarily as a result of declines in new and recurring business, mainly driven by (1) customer attrition, (2) declines in overall advertising spending by our clients, (3) the significant impact of the weak local business conditions on consumer spending in our clients’ markets and (4) an increase in competition and more fragmentation in local business search. The decline in GAAP gross advertising revenues is also a result of recognizing approximately one month of revenues from Business.com in 2011 compared to three and six months of revenues in 2010 due to the sale of substantially all net assets of Business.com in February 2011, as well as not recognizing revenues associated with a delinquent certified marketing representative (“CMR”) during the three and six months ended June 30, 2011.

GAAP sales claims and allowances for the three and six months ended June 30, 2011 decreased $2.7 million, or 40.3%, and $8.7 million, or 50.0%, from non-GAAP adjusted and combined adjusted sales claims and allowances for the three and six months ended June 30, 2010, respectively. The decline in GAAP sales claims and allowances for the three and six months ended June 30, 2011 is primarily due to lower claims experience as a result of process improvements and operating efficiencies, which improved print copy quality in certain of our markets, as well as lower advertising sales volume.

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Expenses

The components of our GAAP and non-GAAP adjusted expenses for the three and six months ended June 30, 2011 and non-GAAP adjusted and combined adjusted expenses for the three and six months ended June 30, 2010 were as follows:

	Successor					Non-GAAP
	Company					Adjusted
	Three					Three
	Months Ended					Months Ended
(amounts in millions)	June 30, 2011		Adjustments			June 30, 2011
Production and distribution expenses	$	75.2	$	—		$	75.2
Selling and support expenses		110.8		—			110.8
General and administrative expenses		36.1		—			36.1
Depreciation and amortization expenses		61.9		—			61.9
Impairment charges		801.1		(801.1	)(1)		—
Total	$	1,085.1	$	(801.1	)	$	284.0

	Successor					Non-GAAP
	Company					Adjusted
	Three		Fresh Start and			Three
	Months Ended		Other			Months Ended		$			%
(amounts in millions)	June 30, 2010		Adjustments			June 30, 2010		Change			Change
Production and distribution expenses	$	49.2	$	30.5	(2)	$	79.7	$	(4.5	)		(5.6	)%
Selling and support expenses		94.9		28.5	(2)		123.4		(12.6	)		(10.2	)
General and administrative expenses		41.1		—			41.1		(5.0	)		(12.2	)
Depreciation and amortization expenses		59.6		—			59.6		2.3			3.9
Impairment charges		769.7		(769.7	)(1)		—		—			—
Total	$	1,014.5	$	(710.7	)	$	303.8	$	(19.8	)		(6.5	)%

	Successor					Non-GAAP
	Company					Adjusted
	Six					Six
	Months Ended					Months Ended
(amounts in millions)	June 30, 2011		Adjustments			June 30, 2011
Production and distribution expenses	$	150.2	$	—		$	150.2
Selling and support expenses		214.9		—			214.9
General and administrative expenses		74.1		—			74.1
Depreciation and amortization expenses		116.0		—			116.0
Impairment charges		801.1		(801.1	)(1)		—
Total	$	1,356.3	$	(801.1	)	$	555.2

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	Successor		Predecessor					Non-GAAP Combined
	Company		Company					Adjusted
	Five		One					Six
	Months		Month					Months
	Ended		Ended					Ended
	June 30,		January 31,		Fresh Start and Other			June 30,		$			%
(amounts in millions)	2010		2010		Adjustments			2010		Change			Change
Production and distribution expenses	$	76.8	$	26.9	$	57.1	(2)	$	160.8	$	(10.6	)		(6.6	)%
Selling and support expenses		154.2		40.9		56.6	(2)		251.7		(36.8	)		(14.6	)
General and administrative expenses		63.3		8.3		—			71.6		2.5			3.5
Depreciation and amortization expenses		99.0		20.2		—			119.2		(3.2	)		(2.7	)
Impairment charges		769.7		—		(769.7	)(1)		—		—			—
Total	$	1,163.0	$	96.3	$	(656.0	)	$	603.3	$	(48.1	)		(8.0	)%

(1)	The goodwill impairment charge has been removed from GAAP results for the three and six months ended June 30, 2011. The goodwill and non-goodwill intangible asset impairment charges have been removed from non-GAAP adjusted and combined adjusted results for the three and six months ended June 30, 2010.
(2)	Represents (a) certain deferred expenses for advertising sales fulfilled prior to the Fresh Start Reporting Date, which would have been recognized during the three and five months ended June 30, 2010 absent our adoption of fresh start accounting required under GAAP and (b) the exclusion of cost-uplift recorded under fresh start accounting.

Certain costs directly related to the selling and production of directories are initially deferred and then amortized ratably over the life of the directories under the deferral and amortization method of accounting to match revenue recognized relating to such directories, with cost recognition commencing in the month directory distribution is substantially complete. These costs are specifically identifiable to a particular directory and include sales commissions and print, paper and initial distribution costs. Sales commissions include amounts paid to employees for sales to local clients and to CMRs, which act as our channel to national clients. All other expenses, such as sales person salaries, sales manager compensation, sales office occupancy, publishing and information technology services, are not specifically identifiable to a particular directory and are recognized as incurred. Except for certain expenses associated with advertising sales fulfilled prior to the Fresh Start Reporting Date, which fresh start accounting precluded us from recognizing, our costs recognized in a reporting period consist of: (i) costs incurred in that period and fully recognized in that period; (ii) costs incurred in a prior period, a portion of which is amortized and recognized in the current period; and (iii) costs incurred in the current period, a portion of which is amortized and recognized in the current period and the balance of which is deferred until future periods. Consequently, there will be a difference between costs recognized in any given period and costs incurred in the given period, which may be significant.

Production and Distribution Expenses

GAAP production and distribution expenses for the three and six months ended June 30, 2011 were $75.2 million and $150.2 million, respectively, compared to non-GAAP adjusted and combined adjusted production and distribution expenses of $79.7 million and $160.8 million for the three and six months ended June 30, 2010, respectively. The primary components of the $4.5 million, or 5.6%, and $10.6 million, or 6.6%, decrease in GAAP production and distribution expenses for the three and six months ended June 30, 2011, respectively, were as follows:

	Three Months			Six Months Ended
(amounts in millions)	Ended June 30, 2011			June 30, 2011
Lower print, paper and distribution expenses	$	(2.6	)	$	(6.2	)
Lower Internet production and distribution expenses		(1.4	)		(4.1	)
All other, net		(0.5	)		(0.3	)
Total decrease in GAAP production and distribution expenses for the three and six months ended June 30, 2011	$	(4.5	)	$	(10.6	)

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GAAP print, paper and distribution expenses for the three and six months ended June 30, 2011 declined $2.6 million and $6.2 million, respectively, compared to non-GAAP adjusted and combined adjusted print, paper and distribution expenses for the three and six months ended June 30, 2010, respectively, primarily due to lower page volumes associated with declines in print advertisements.

GAAP Internet production and distribution expenses for the three and six months ended June 30, 2011 declined $1.4 million and $4.1 million, respectively, compared to non-GAAP adjusted and combined adjusted Internet production and distribution expenses for the three and six months ended June 30, 2010, respectively, due to purchasing efficiencies, lower headcount and a reduction in DexNet customers. The decline in GAAP Internet production and distribution expenses is also a result of recognizing approximately one month of expenses from Business.com in 2011 compared to three and six months of expenses in 2010 due to the sale of substantially all net assets of Business.com in February 2011. These declines are partially offset by increased purchased traffic costs that direct traffic to our online properties driven by higher cost per click rates.

Selling and Support Expenses

GAAP selling and support expenses for the three and six months ended June 30, 2011 were $110.8 million and $214.9 million, respectively, compared to non-GAAP adjusted and combined adjusted selling and support expenses of $123.4 million and $251.7 million for three and six months ended June 30, 2010, respectively. The primary components of the $12.6 million, or 10.2%, and $36.8 million, or 14.6%, decrease in GAAP selling and support expenses for the three and six months ended June 30, 2011, respectively, were as follows:

	Three Months			Six Months Ended
(amounts in millions)	Ended June 30, 2011			June 30, 2011
Lower commissions and salesperson expenses	$	(6.5	)	$	(13.8	)
Change in bad debt expense		3.5			(9.4	)
Lower marketing expenses		(5.2	)		(5.9	)
Lower directory publishing expenses		(2.0	)		(3.2	)
Lower advertising expenses		(0.1	)		(2.2	)
All other, net		(2.3	)		(2.3	)
Total decrease in GAAP selling and support expenses for the three and six months ended June 30, 2011	$	(12.6	)	$	(36.8	)

GAAP commissions and salesperson expenses for the three and six months ended June 30, 2011 decreased $6.5 million and $13.8 million, respectively, compared to non-GAAP adjusted and combined adjusted commissions and salesperson expenses for the three and six months ended June 30, 2010, respectively, primarily due to lower advertising sales and its effect on variable-based commissions, lower headcount and declines in commissions associated with a delinquent CMR.

GAAP bad debt expense for the three months ended June 30, 2011 increased $3.5 million compared to non-GAAP adjusted bad debt expense for the three months ended June 30, 2010, primarily due to slight increases in write-off experience during the three months ended June 30, 2011 and its impact on allowance factors. GAAP bad debt expense for the six months ended June 30, 2011 declined $9.4 million compared to non-GAAP combined adjusted bad debt expense for the six months ended June 30, 2010, primarily due to effective credit and collections practices, which have driven improvement in our accounts receivable portfolio, as well as lower billing volumes associated with declines in advertisers and advertising sales, partially offset by the slight increases in write-off experience noted above. GAAP bad debt expense for the three and six months ended June 30, 2011 represented 3.9% and 3.1%, respectively, of our net revenue, compared to 2.5% and 3.6% for the non-GAAP adjusted and combined adjusted three and six months ended June 30, 2010, respectively.

GAAP marketing expenses for the three and six months ended June 30, 2011 declined $5.2 million and $5.9 million, respectively, compared to non-GAAP adjusted and combined adjusted marketing expenses for the three and six months ended June 30, 2010, respectively, primarily due to lower headcount and reduced interactive marketing spend.

GAAP directory publishing expenses for the three and six months ended June 30, 2011 declined $2.0 million and $3.2 million, respectively, compared to non-GAAP adjusted and combined adjusted directory publishing expenses for the three and six months ended June 30, 2010, respectively, primarily due to declines in print advertisements and lower headcount.

33

GAAP advertising expenses for the three and six months ended June 30, 2011 decreased $0.1 million and $2.2 million, respectively, compared to non-GAAP adjusted and combined adjusted advertising expenses for the three and six months ended June 30, 2010, respectively, primarily due to the timing of media spend between periods.

General and Administrative Expenses

GAAP general and administrative (“G&A”) expenses for the three and six months ended June 30, 2011 were $36.1 million and $74.1 million, respectively, compared to non-GAAP adjusted and combined adjusted G&A expenses of $41.1 million and $71.6 million for the three and six months ended June 30, 2010, respectively. The primary components of the $5.0 million, or 12.2% decrease, and $2.5 million, or 3.5% increase, in GAAP G&A expenses for the three and six months ended June 30, 2011, respectively, were as follows:

	Three Months			Six Months Ended
(amounts in millions)	Ended June 30, 2011			June 30, 2011
Expenses associated with departure of Chief Executive Officer in 2010	$	(9.5	)	$	(9.5	)
Lower information technology (“IT”) expenses		(2.7	)		(3.0	)
Higher restructuring expenses		8.7			14.7
Expenses associated with departure of Chief Financial Officer in 2011		3.2			3.2
All other, net		(4.7	)		(2.9	)
Total (decrease) increase in GAAP G&A expenses for the three and six months ended June 30, 2011	$	(5.0	)	$	2.5

During the adjusted and combined adjusted three and six months ended June 30, 2010, we recognized expenses of $9.5 million associated with the departure of our former Chief Executive Officer. There were no comparable expenses recognized during the three and six months ended June 30, 2011, respectively.

GAAP IT expenses for the three and six months ended June 30, 2011 declined $2.7 million and $3.0 million, respectively, compared to non-GAAP adjusted and combined adjusted IT expenses for the three and six months ended June 30, 2010, respectively, due to additional expenses associated with several outsourced IT initiatives during 2010 that have not been incurred in 2011.

During the fourth quarter of 2010, we commenced a restructuring plan that includes headcount reductions and consolidation of responsibilities, which continued into 2011. As a result of this restructuring plan, the Company recognized a restructuring charge of $8.7 million and $14.7 million during the three and six months ended June 30, 2011, respectively. There were no restructuring charges recognized during the non-GAAP adjusted and combined adjusted three and six months ended June 30, 2010, respectively.

During the three and six months ended June 30, 2011, we recognized expenses of $3.2 million associated with the departure of our former Chief Financial Officer. There were no comparable expenses recognized during the adjusted and combined adjusted three and six months ended June 30, 2010, respectively.

Depreciation and Amortization Expenses

GAAP depreciation and amortization expenses for the three and six months ended June 30, 2011 were $61.9 million and $116.0 million, respectively, compared to depreciation and amortization expenses of $59.6 million and combined depreciation and amortization expenses of $119.2 million for the three and six months ended June 30, 2010, respectively. GAAP amortization of intangible assets was $45.5 million and $83.7 million for the three and six months ended June 30, 2011, compared to amortization of intangible assets of $46.3 million and combined amortization of intangible assets of $92.7 million for the three and six months ended June 30, 2010, respectively. The decrease in GAAP intangible asset amortization expense for the three and six months ended June 30, 2011 is primarily a result of not recognizing any amortization expense for Business.com intangible assets, as these intangible assets were fully impaired during 2010. This decrease is partially offset by additional amortization expense associated with revisions to our long-term forecast that had a direct impact on the timing of amortization expense associated with intangible assets that are amortized using the income forecast method. See below for additional information. The income forecast amortization methodology assumes the value derived from our intangible assets and associated amortization expense is greater in the earlier years and steadily declines over time.

34

In conjunction with our impairment testing as of May 31, 2011, the Company evaluated the remaining useful lives of identifiable intangible assets and other long-lived assets. Based on this evaluation, the Company has determined that the estimated useful lives of intangible assets presented in Item 1, “Financial Statements (Unaudited)” — Note 2, “Summary of Significant Accounting Policies — Identifiable Intangible Assets and Goodwill” reflect the period they are expected to contribute to future cash flows and therefore continue to be deemed appropriate. However, revisions to our long-term forecast, which was used for our impairment testing as of May 31, 2011, had a direct impact on the timing of amortization expense associated with intangible assets that are amortized using the income forecast method. The Company anticipates an increase in amortization expense of $34.3 million and total amortization expense of $187.1 million for 2011 resulting from these changes.

GAAP depreciation of fixed assets and amortization of computer software was $16.4 million and $32.3 million for the three and six months ended June 30, 2011, respectively, compared to depreciation of $13.3 million and combined depreciation of $26.5 million for the three and six months ended June 30, 2010, respectively. The increase in GAAP depreciation expense for the three and six months ended June 30, 2011 is primarily due to software development capital projects placed into service during the later part of 2010 and first half of 2011.

Impairment Charges

Based upon our announcement in May 2011 of the impending departure of our Executive Vice President and Chief Financial Officer, which subsequently occurred on July 29, 2011, the continued decline in the trading value of our debt and equity securities and revisions made to our long-term forecast, the Company concluded there were indicators of impairment as of May 31, 2011. As a result, we performed impairment tests of our goodwill, definite-lived intangible assets and other long-lived assets as of May 31, 2011. The impairment testing results for recoverability of our definite-lived intangible assets and other long-lived assets indicated they were recoverable and thus no impairment test was required as of May 31, 2011. Based upon the testing results of our goodwill, we determined that the remaining goodwill assigned to each of our reporting units was fully impaired and thus recognized an aggregate goodwill impairment charge of $801.1 million during the three and six months ended June 30, 2011, which was recorded at each of our reporting units. As of June 30, 2011, the Company has no recorded goodwill at any of its reporting units. See Item 1, “Financial Statements (Unaudited)” — Note 2, “Summary of Significant Accounting Policies — Identifiable Intangible Assets and Goodwill” for additional information.

During the three months ended June 30, 2010, the Company concluded that there were indicators of impairment and as a result, we performed impairment tests of our goodwill, definite-lived intangible assets and other long-lived assets as of June 30, 2010. The testing results of our definite-lived intangible assets and other long-lived assets resulted in an impairment charge of $17.3 million during the three and five months ended June 30, 2010 associated with trade names and trademarks, technology, local customer relationships and other from our former Business.com reporting unit. The testing results of our goodwill resulted in an impairment charge of $752.3 million during the three and five months ended June 30, 2010, which was recorded in each of our reporting units. The sum of the goodwill and non-goodwill intangible asset impairment charges totaled $769.7 million for the three and five months ended June 30, 2010. Please refer to our Quarterly Report on Form 10-Q for the period ended June 30, 2010 for additional information including estimates and assumptions used in our impairment testing.

Operating Income (Loss)

Non-GAAP adjusted operating income (loss) for the three and six months ended June 30, 2011 and non-GAAP adjusted and combined adjusted operating income (loss) for the three and six months ended June 30, 2010 was as follows:

	Successor						Non-GAAP
	Company						Adjusted
	Three						Three
	Months Ended						Months Ended
(amounts in millions)	June 30, 2011			Adjustments			June 30, 2011
Total	$	(707.8	)	$	801.1	(1)	$	93.3

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	Successor						Non-GAAP
	Company						Adjusted
	Three						Three
	Months			Fresh Start			Months
	Ended			and Other			Ended		$			%
(amounts in millions)	June 30, 2010			Adjustments			June 30, 2010		Change			Change
Total	$	(853.5	)	$	1,001.6	(2)	$	148.1	$	(54.8	)		(37.0	)%

	Successor				Non-GAAP
	Company				Adjusted
	Six				Six
	Months Ended				Months Ended
(amounts in millions)	June 30, 2011			Adjustments	June 30, 2011
Total	$	(587.8	)	$801.1(1)	$	213.3

	Successor			Predecessor					Non-GAAP Combined
	Company			Company					Adjusted
	Five Months			One Month		Fresh Start			Six
	Ended			Ended January		and Other			Months Ended		$			%
(amounts in millions)	June 30, 2010			31,2010		Adjustments			June 30, 2010		Change			Change
Total	$	(948.9	)	$	64.1	$	1,201.6	(2)	$	316.8	$	(103.5	)		(32.7	)%

(1)

The goodwill impairment charge has been removed from GAAP results for the three and six months ended June 30, 2011.

(2)

Represents the net effect of (a) eliminating gross advertising revenues, sales claims and allowances, other revenues and certain deferred expenses for advertising sales fulfilled prior to the Fresh Start Reporting Date, which would have been recognized during the three and five months ended June 30, 2010 absent our adoption of fresh start accounting required under GAAP, (b) the exclusion of cost-uplift recorded under fresh start accounting, and (c) the exclusion of the goodwill and non-goodwill intangible asset impairment charges during the three and five months ended June 30, 2010.

Non-GAAP adjusted operating income for the three and six months ended June 30, 2011 of $93.3 million and $213.3 million, respectively, compares to non-GAAP adjusted and combined adjusted operating income of $148.1 million and $316.8 million for the three and six months ended June 30, 2010, respectively. The decrease in non-GAAP adjusted operating income for the three and six months ended June 30, 2011 is due to the revenue and expense trends described above.

GAAP Results for the Three and Six Months Ended June 30, 2011, Three and Five Months Ended June 30, 2010 (Successor Company) and One Month Ended January 31, 2010 (Predecessor Company)

Gain on Sale of Assets

On February 14, 2011, we completed the sale of substantially all net assets of Business.com, including long-lived assets, domain names, trademarks, brands, intellectual property, related content and technology platform. As a result, we recognized a gain on the sale of these assets of $13.4 million during the six months ended June 30, 2011.

Interest Expense, Net

Successor Company

Net interest expense of the Company was $58.1 million and $115.8 million for the three and six months ended June 30, 2011, respectively, and $73.4 million and $122.4 million for the three and five months ended June 30, 2010, respectively.

In conjunction with our adoption of fresh start accounting and reporting on the Fresh Start Reporting Date, an adjustment was established to record our outstanding debt at fair value on the Fresh Start Reporting Date. This fair value adjustment will be amortized as an increase to interest expense over the remaining term of the respective debt agreements using the effective interest method and does not impact future scheduled interest or principal payments.

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Amortization of the fair value adjustment included as an increase to interest expense was $7.5 million and $14.8 million for the three and six months ended June 30, 2011, respectively, and $8.3 million and $13.9 million for the three and five months ended June 30, 2010, respectively.

During the first quarter of 2010, we entered into interest rate swap and interest rate cap agreements that are not designated as cash flow hedges. The Company’s interest expense includes expense of $0.4 million and income of $0.3 million for the three and six months ended June 30, 2011, respectively, and expense of $5.6 million and $6.7 million for the three and five months ended June 30, 2010, respectively, resulting from the change in fair value of these interest rate swaps and interest rate caps.

Predecessor Company

Net interest expense of the Predecessor Company was $19.7 million for the one month ended January 31, 2010.

Contractual interest expense that would have appeared on the Predecessor Company’s unaudited condensed consolidated statement of operations if not for the filing of the Chapter 11 petitions was $65.9 million for the one month ended January 31, 2010.

Reorganization Items, Net

Predecessor Company

Reorganization items directly associated with the process of reorganizing the business under Chapter 11 have been recorded on a separate line item on the consolidated statement of operations. The Predecessor Company has recorded $7.8 billion of reorganization items during the one month ended January 31, 2010 comprised of a $4.5 billion gain on reorganization / settlement of liabilities subject to compromise and fresh start accounting adjustments of $3.3 billion. The following table displays the details of reorganization items for the one month ended January 31, 2010:

	Predecessor Company
	One Month Ended
(amounts in thousands)	January 31, 2010
Liabilities subject to compromise	$	6,352,813
Issuance of new Dex One common stock (par value)		(50	)
Dex One additional paid-in capital		(1,450,734	)
Dex One Senior Subordinated Notes		(300,000	)
Reclassified into other balance sheet liability accounts		(39,471	)
Professional fees and other		(38,403	)
Gain on reorganization / settlement of liabilities subject to compromise		4,524,155
Fresh start accounting adjustments:
Goodwill		2,097,124
Write off of deferred revenue and deferred directory costs		655,555
Fair value adjustment to intangible assets		415,132
Fair value adjustment to the amended and restated credit facilities		120,245
Fair value adjustment to fixed assets and computer software		49,814
Write-off of deferred financing costs		(48,443	)
Other fresh start accounting adjustments		(20,450	)
Total fresh start accounting adjustments		3,268,977
Total reorganization items, net	$	7,793,132

Income Taxes

Successor Company

Our quarterly income tax (provision) benefit for income taxes is measured using an estimated annual effective tax rate for the period, adjusted for discrete items that occurred within the periods presented. For the three and six months ended June 30, 2011, we recorded an income tax benefit of $163.7 million and $143.5 million, respectively, which represents an effective tax rate of 21.4% and 20.8%, respectively. The effective tax rate for the three and six months ended June 30, 2011 differs from the federal statutory rate of 35.0% primarily due to non-deductible goodwill impairment, changes in deferred tax liabilities related to the stock basis of subsidiaries, changes in recorded valuation allowances and decreases in the liability for unrecognized tax benefits.

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The Company recorded a goodwill impairment charge of $801.1 million for the three and six months ended June 30, 2011, of which $457.2 million related to non-deductible goodwill. Impairment of non-deductible goodwill reduced the income tax benefit of the impairment by $174.1 million and reduced our effective tax rate by approximately 22.7% and 25.2% for the three and six months ended June 30, 2011, respectively.

Upon emergence from bankruptcy, the Company recorded deferred tax liabilities related to the excess of the financial statement carrying amount over the tax basis of investments in certain subsidiaries. The estimated annual effective tax rate for the current year includes an estimate of the change in these deferred tax liabilities for the year. The goodwill impairment charge reduced the financial statement carrying amount of investments in certain subsidiaries, which caused a reduction in these deferred tax liabilities. The resulting reduction in income tax expense for the three and six months ended June 30, 2011 relating to the change in these deferred tax liabilities was $72.5 million and $78.9 million, respectively, which increased the effective tax rate for the three and six months ended June 30, 2011 by approximately 9.5% and 11.4%, respectively.

The estimated annual effective tax rate for the current year includes an estimate of the valuation allowance expected to be necessary at the end of the year for originating deferred tax assets. The goodwill impairment charge gave rise to a deferred tax asset whose realization did not meet a more-likely-than-not threshold, requiring a valuation allowance. The resulting increase in income tax expense for the three and six months ended June 30, 2011 relating to the change in valuation allowance is $47.2 million and $46.6 million, respectively, which reduced the effective tax rate for the three and six months ended June 30, 2011 by approximately 6.2% and 6.8%, respectively.

During the three months ended June 30, 2011, the federal statute of limitations relating to a previously unrecognized tax position for revenue recognition closed. The Company has decreased its liability for unrecognized tax benefits associated with this federal and state uncertain tax position by $28.2 million and recorded a net tax benefit of $24.0 million for both the three and six months ended June 30, 2011, respectively, which increased the effective tax rate for the three and six months ended June 30, 2011 by approximately 3.1% and 3.5%, respectively.

For the three and five months ended June 30, 2010, we recorded an income tax benefit of $157.0 million and $558.6 million, respectively, which represents an effective tax rate of 16.9% and 52.1%, respectively. As a result of the goodwill and non-goodwill intangible asset impairment charges during the three and five months ended June 30, 2010, we recognized a non-deductible adjustment to our effective tax rate of $201.8 million for the three and five months ended June 30, 2010.

Internal Revenue Code Section 382 (“Section 382”) imposes limitations on the availability of net operating losses and other corporate tax attributes as ownership changes occur. Under Section 382, potential limitations are triggered when there has been an ownership change, which is generally defined as a greater than 50% change in stock ownership (by value) over a three-year prescribed testing period. Such change in ownership will restrict the Company’s ability to use certain net operating losses and other corporate tax attributes in the future. However, the ownership change does not constitute a change in control under any of the Company’s debt agreements or other contracts. The Company experienced an ownership change in March 2009.

Based upon the closing of the SEC filing period for Schedules 13-G and review of these schedules filed through February 15, 2010, the Company determined that, more likely than not, a certain “check-the-box” election was effective prior to the date of the 2009 ownership change under Section 382. As a result, the Company recorded a tax benefit for the reversal of a liability for unrecognized tax benefit of $351.9 million in the condensed consolidated statement of operations for the five months ended June 30, 2010, which was the primary driver of our effective tax rate for the period.

Predecessor Company

For the one month ended January 31, 2010, the Predecessor Company recorded an income tax provision of $(917.5) million which represents an effective tax rate of 11.7%.

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Net Income (Loss) and Earnings (Loss) Per Share

Successor Company

Net loss of $(602.1) million and $(546.7) million for the three and six months ended June 30, 2011, respectively, was a direct result of the goodwill impairment charge and revenue and expense trends described above, partially offset by the income tax benefit described above. Net loss of $(769.9) million and $(512.7) million for the three and five months ended June 30, 2010, respectively, was directly impacted by the impairment charges noted above, the significant impact of the effects of fresh start accounting and the revenue and expense trends described above, partially offset by the income tax benefit described above.

Basic and diluted earnings (loss) per share (“EPS”) was $(12.01) and $(10.92) for the three and six months ended June 30, 2011, respectively. For the three and five months ended June 30, 2010, basic and diluted EPS was $(15.39) and $(10.25), respectively. See Item 1, “Financial Statements (Unaudited)” — Note 2, “Summary of Significant Accounting Policies — Earnings Per Share” for further details and computations of basic and diluted EPS.

Predecessor Company

Net income of $6,920.0 million for the one month ended January 31, 2010 is primarily due to the gain on reorganization and fresh start accounting adjustments that comprise reorganization items, net. In addition, net income for the one month ended January 31, 2010 was determined based on the revenue and expense trends and income taxes described above. For the one month ended January 31, 2010, basic EPS was $100.3 and diluted EPS was $100.2.

Non-GAAP Statistical Measures

Advertising sales is a non-GAAP statistical measure and consists of sales of advertising in print directories distributed during the period and Internet-based products and services with respect to which such advertising first appeared publicly during the period. It is important to distinguish advertising sales from net revenues, which under GAAP are recognized under the deferral and amortization method. Advertising sales in current periods will be recognized as gross advertising revenues in future periods as a result of the deferral and amortization method of revenue recognition. Advertising sales for the three and six months ended June 30, 2011 were $368.8 million and $733.3 million, respectively, representing a decline of $63.1million, or 14.6%, and $135.6 million, or 15.6%, from advertising sales of $431.9 million and combined advertising sales of $868.9 million for the three and six months ended June 30, 2010, respectively.

In order to provide more visibility into what the Company will book as revenue in the future, we are presenting an additional non-GAAP statistical measure called bookings, which represent sales activity associated with our print directories and Internet-based marketing solutions during the period. Bookings associated with our local customers represent signed contracts during the period. Bookings associated with our national customers represent what has been published or fulfilled during the period. Bookings for the three and six months ended June 30, 2011 were $316.3 million and $667.3 million, respectively, representing a decline of $55.6 million, or 15.0%, and $122.1 million, or 15.5%, from bookings of $371.9 million and combined bookings of $789.4 million for the three and six months ended June 30, 2010, respectively.

The decrease in advertising sales and bookings for the three and six months ended June 30, 2011 is a result of declines in new and recurring business, mainly driven by (1) customer attrition, (2) declines in overall advertising spending by our clients, (3) the significant impact of the weak local business conditions on consumer spending in our clients’ markets and (4) an increase in competition and more fragmentation in local business search.

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LIQUIDITY AND CAPITAL RESOURCES

The following table presents the fair market value of our long-term debt at June 30, 2011 based on quoted market prices on that date, as well as the carrying value of our long-term debt at June 30, 2011, which includes $76.2 million of unamortized fair value adjustments required by GAAP in connection with the Company’s adoption of fresh start accounting on the Fresh Start Reporting Date.

	Fair Market Value		Carrying Value
	June 30, 2011		June 30, 2011
RHDI Amended and Restated Credit Facility	$	658,267	$	968,040
Dex Media East Amended and Restated Credit Facility		512,658		698,854
Dex Media West Amended and Restated Credit Facility		523,428		630,097
Dex One 12%/14% Senior Subordinated Notes due 2017		126,000		300,000
Total Dex One consolidated		1,820,353		2,596,991
Less current portion		224,046		298,907
Long-term debt	$	1,596,307	$	2,298,084

RHDI Amended and Restated Credit Facility

As of June 30, 2011, the outstanding carrying value under the amended and restated RHDI credit facility (“RHDI Amended and Restated Credit Facility”) totaled $968.0 million. The RHDI Amended and Restated Credit Facility requires quarterly principal and interest payments and matures on October 24, 2014. The weighted average interest rate of outstanding debt under the RHDI Amended and Restated Credit Facility was 9.0% at June 30, 2011.

Dex Media East Amended and Restated Credit Facility

As of June 30, 2011, the outstanding carrying value under the amended and restated Dex Media East credit facility (“Dex Media East Amended and Restated Credit Facility”) totaled $698.9 million. The Dex Media East Amended and Restated Credit Facility requires quarterly principal and interest payments and matures on October 24, 2014. The weighted average interest rate of outstanding debt under the Dex Media East Amended and Restated Credit Facility was 2.8% at June 30, 2011.

Dex Media West Amended and Restated Credit Facility

As of June 30, 2011, the outstanding carrying value under the amended and restated Dex Media West credit facility (“Dex Media West Amended and Restated Credit Facility”) totaled $630.1 million. The Dex Media West Amended and Restated Credit Facility requires quarterly principal and interest payments and matures on October 24, 2014. The weighted average interest rate of outstanding debt under the Dex Media West Amended and Restated Credit Facility was 7.0% at June 30, 2011.

Impact of Fresh Start Accounting

In conjunction with our adoption of fresh start accounting, an adjustment was established to record our outstanding debt at fair value on the Fresh Start Reporting Date. The Company was required to record our amended and restated credit facilities at a discount as a result of their fair value on the Fresh Start Reporting Date. Therefore, the carrying amount of these debt obligations is lower than the principal amount due at maturity. A total discount of $120.2 million was recorded upon adoption of fresh start accounting associated with our amended and restated credit facilities, of which $76.2 million remains unamortized at June 30, 2011, as shown in the following table.

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					Outstanding Debt at
					June 30, 2011
					Excluding the
			Unamortized Fair		Impact of
	Carrying Value at		Value Adjustments		Unamortized Fair
	June 30, 2011		at June 30, 2011		Value Adjustments
RHDI Amended and Restated Credit Facility	$	968,040	$	12,463	$	980,503
Dex Media East Amended and Restated Credit Facility		698,854		54,121		752,975
Dex Media West Amended and Restated Credit Facility		630,097		9,612		639,709
Dex One 12%/14% Senior Subordinated Notes due 2017		300,000		—		300,000
Total	$	2,596,991	$	76,196	$	2,673,187

Liquidity and Cash Flows

The Company’s primary sources of liquidity are existing cash on hand and cash flows generated from operations. The Company’s primary liquidity requirements will be to fund operations and service its indebtedness.

The Company’s ability to meet its debt service requirements will be dependent on its ability to generate sufficient cash flows from operations. The primary sources of cash flows will consist mainly of cash receipts from the sale of our marketing solutions and can be impacted by, among other factors, general local business conditions, an increase in competition and more fragmentation in the local business search market, consumer confidence and the level of demand for our advertising products and services.

Based on current financial projections, but in any event for at least the next 12-15 months, the Company expects to be able to continue to generate cash flows from operations in amounts sufficient to fund operations and capital expenditures, as well as meet debt service requirements. The Company’s financial projections also include excess cash flow that will be used to fund additional debt repayments resulting from cash flow sweep requirements under our amended and restated credit facilities. However, no assurances can be made that our business will generate sufficient cash flows from operations to enable us to fund these prospective cash requirements since the current information used in our financial projections could change in the future as a result of changes in estimates and assumptions as well as risks noted in Part I — Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2010.

As provided for in our amended and restated credit facilities, each of the Company’s operating subsidiaries are permitted to fund a share of the Parent Company’s interest obligations on the $300.0 million aggregate principal amount of 12%/14% Senior Subordinated Notes due 2017 (“Dex One Senior Subordinated Notes”). Other funds, based on a percentage of each operating subsidiaries’ excess cash flow, as defined in each credit agreement, may be provided to the Parent Company to fund specific activities, such as acquisitions. In addition, each of our operating subsidiaries is permitted to send up to $5 million annually to the Parent Company. Lastly, our operating subsidiaries fund on a proportionate basis those expenses paid by the Parent Company to fund the daily operations of our operating subsidiaries. Excluding the very limited exceptions noted above, all of the net assets of the Company and its subsidiaries are restricted from being paid as dividends to any third party, and our subsidiaries are restricted from paying dividends, loans or advances to us under the terms of our amended and restated credit facilities.

The Company currently believes that the limitations and restrictions imposed by our amended and restated credit facilities noted above will not impact our ability to fund operations and capital expenditures as well as meet debt service requirements, specifically at the Parent Company level. However, no assurances can be made that these limitations and restrictions will not have an impact on our ability to fund operations and capital expenditures as well as meet debt service requirements specifically at the Parent Company level in the future.

See Part I — Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” — “Recent Trends and Developments Related to Our Business” for additional information related to trends and uncertainties with respect to our business, which could have a significant impact on our future liquidity and cash flows.

41

Successor Company

Aggregate outstanding debt at June 30, 2011 was $2,597.0 million, which includes fair value adjustments of $76.2 million required by GAAP in connection with the Company’s adoption of fresh start accounting. During the three and six months ended June 30, 2011, we made scheduled principal payments of $40.2 million and $81.0 million, respectively, and accelerated principal payments of $20.0 million and $74.0 million, respectively, for total principal payments of $60.2 million and $155.0 million, respectively, under our amended and restated credit facilities. For the three and six months ended June 30, 2011, we made aggregate net cash interest payments of $40.9 million and $104.6 million, respectively. At June 30, 2011, we had $169.6 million of cash and cash equivalents before checks not yet presented for payment of $0.3 million.

Six Months Ended June 30, 2011

Cash provided by operating activities was $212.6 million for the six months ended June 30, 2011 and included net loss adjusted for non-cash items such as a goodwill impairment charge and the associated deferred income tax benefit as well as depreciation and amortization, partially offset by changes in assets and liabilities primarily driven by changes in deferred directory revenues.

Cash provided by investing activities for the six months ended June 30, 2011 was $0.6 million and relates to the sale of substantially all net assets of Business.com, partially offset by the purchase of fixed assets, primarily computer equipment, software and leasehold improvements.

Cash used in financing activities for the six months ended June 30, 2011 was $171.4 million and includes the following:

• $155.0 million in principal payments on our amended and restated credit facilities;

• $0.5 million provided by other financing items; and

• $16.9 million in the decreased balance of checks not yet presented for payment.

Five Months Ended June 30, 2010

Cash provided by operating activities was $240.1 million for the five months ended June 30, 2010 and included net loss adjusted for non-cash items such as goodwill and non-goodwill intangible asset impairment charges and depreciation and amortization, and changes in assets and liabilities primarily driven by changes in deferred directory revenues, partially offset by other non-cash items, net primarily related to a deferred income tax benefit.

Cash used in investing activities for the five months ended June 30, 2010 was $15.2 million and relates to the purchase of fixed assets, primarily computer equipment, software and leasehold improvements.

Cash used in financing activities for the five months ended June 30, 2010 was $302.6 million and includes the following:

• $303.4 million in principal payments on our amended and restated credit facilities;

• $2.8 million in other financing costs; and

• $3.6 million in the increased balance of checks not yet presented for payment.

Predecessor Company

One Month Ended January 31, 2010

Cash provided by operating activities was $71.7 million for the one month ended January 31, 2010 and included net income adjusted for non-cash items, net primarily related to non-cash reorganization items, net, offset by a deferred income tax provision and depreciation and amortization, and changes in assets and liabilities primarily driven by changes in deferred income taxes and pension and postretirement long-term liabilities.

Cash used in investing activities for the one month ended January 31, 2010 was $1.8 million and relates to the purchase of fixed assets, primarily computer equipment, software and leasehold improvements.

42

Cash used in financing activities for the one month ended January 31, 2010 was $536.5 million and includes the following:

• $511.3 million in principal payments on term loans under the Predecessor Company’s credit facilities in accordance with the Plan and in conjunction with our emergence from Chapter 11;

• $22.1 million in costs associated with the issuance of the Dex One Senior Subordinated Notes and other financing related costs; and

• $3.1 million in the decreased balance of checks not yet presented for payment.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk and Risk Management

The Company’s amended and restated credit facilities each bear interest at variable rates and, accordingly, our earnings and cash flow are affected by changes in interest rates. Management believes that it is prudent to mitigate the interest rate risk on a portion of its variable rate borrowings. To satisfy our objectives and requirements, the Company has entered into interest rate swap and interest rate cap agreements, which have not been designated as cash flow hedges, to manage our exposure to interest rate fluctuations on our variable rate debt.

The Company has entered into the following interest rate swaps that effectively convert $500.0 million, or approximately 22%, of the Company’s variable rate debt to fixed rate debt as of June 30, 2011. Since the RHDI Amended and Restated Credit Facility and the Dex Media West Amended and Restated Credit Facility are subject to a LIBOR floor of 3.00% and the LIBOR rate is below that floor at June 30, 2011, both credit facilities are effectively fixed rate debt until such time LIBOR exceeds the stated floor. At June 30, 2011, approximately 88% of our total debt outstanding consisted of variable rate debt, excluding the effect of our interest rate swaps, the LIBOR floors and interest rate caps, which are discussed below. Including the effect of our interest rate swaps, total fixed rate debt comprised approximately 31% of our total debt portfolio as of June 30, 2011. The interest rate swaps mature at varying dates from February 2012 through February 2013.

Interest Rate Swaps — Dex Media East

Effective Dates	Notional Amount			Pay Rates			Maturity Dates
(amounts in millions)
February 26, 2010	$	300	(2)		1.20% - 1.796	%	February 29, 2012 — February 28, 2013
March 5, 2010		100	(1)		1.688	%	January 31, 2013
March 10, 2010		100	(1)		1.75	%	January 31, 2013
Total	$	500

Under the terms of the interest rate swap agreements, we receive variable interest based on the three-month LIBOR and pay a weighted average fixed rate of 1.5%. The weighted average rate received on our interest rate swaps was 0.3% for the six months ended June 30, 2011. These periodic payments and receipts are recorded as interest expense.

Under the terms of the interest rate cap agreements, the Company will receive payments based on the spread in rates if the three-month LIBOR rate increases above the cap rates noted in the table below. The Company paid $2.1 million for the interest rate cap agreements entered into during the first quarter of 2010. We are not required to make any future payments related to these interest rate cap agreements.

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Interest Rate Caps — RHDI

Effective Dates	Notional Amount			Cap Rates			Maturity Dates
(amounts in millions)
February 26, 2010	$	200	(3)		3.0% - 3.5	%	February 29, 2012 — February 28, 2013
March 8, 2010		100	(4)		3.5	%	January 31, 2013
March 10, 2010		100	(4)		3.0	%	April 30, 2012
Total	$	400

(1)	Consists of one swap
(2)	Consists of three swaps
(3)	Consists of two caps
(4)	Consists of one cap

We use derivative financial instruments for hedging purposes only and not for trading or speculative purposes. By using derivative financial instruments to hedge exposures to changes in interest rates, the Company exposes itself to credit risk and market risk. Credit risk is the possible failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty and, therefore, it is not subject to credit risk. The Company minimizes the credit risk in derivative financial instruments by entering into transactions with major financial institutions with credit ratings of AA- or higher, or the equivalent dependent upon the credit rating agency.

Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

Market Risk Sensitive Instruments

All derivative financial instruments are recognized as either assets or liabilities on the condensed consolidated balance sheets with measurement at fair value. On a quarterly basis, the fair values of our interest rate swaps and interest rate caps are determined based on quoted market prices. These derivative instruments have not been designated as cash flow hedges and as such, the initial fair value and any subsequent gains or losses on the change in the fair value of the interest rate swaps and interest rate caps are reported in earnings as a component of interest expense. Any gains or losses related to the quarterly fair value adjustments are presented as an operating activity on the condensed consolidated statements of cash flows.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

Management conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and Interim Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2011. Based on that evaluation, the Chief Executive Officer and Interim Principal Financial Officer concluded that such disclosure controls and procedures are effective and sufficient to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Act of 1934 is recorded, processed, summarized and reported within the time periods specific in the SEC’s rules and forms. In addition, based on that evaluation, the Chief Executive Officer and Interim Principal Financial Officer concluded that such disclosure controls and procedures are effective and sufficient to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Act of 1934 is accumulated and communicated to management, including the Chief Executive Officer and Interim Principal Financial Officer, to allow timely decisions regarding required disclosure.

(b) Changes in Internal Controls

There have not been any changes in the Company’s internal controls over financial reporting during the Company’s most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to various lawsuits, claims, and regulatory and administrative proceedings arising out of our business covering matters such as general commercial, governmental regulations, intellectual property, employment, tax and other actions. In the opinion of management, the ultimate resolution of these matters will not have a material adverse effect on our results of operations, cash flows or financial position.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I — Item 1A to our Annual Report on Form 10-K for the year ended December 31, 2010. The risk factors disclosed in our Annual Report on Form 10-K, in addition to the other information set forth in this Quarterly Report on Form 10-Q could materially affect our business, financial condition or results. Additional risks and uncertainties not currently known to us or that we currently deem immaterial also may materially adversely affect our business, financial condition or results.

Item 6. Exhibits

Exhibit No.	Document
10.1*^	Severance Agreement and Release, dated April 7, 2011, by and between Dex One Corporation and Sean Greene.
10.2*^	Severance Agreement and Release, dated April 26, 2011, by and between Dex One Corporation and George Bednarz.
10.3^	Separation Agreement, dated May 25, 2011, by and between Dex One Corporation, R.H. Donnelley Inc., Dex Media West, Inc., Dex Media East, Inc. and Steven M. Blondy (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 26, 2011, Commission File No. 001-07155).
31.1*	Certification of Quarterly Report on Form 10-Q for the period ended June 30, 2011 by Alfred T. Mockett, Chief Executive Officer and President of Dex One Corporation under Section 302 of the Sarbanes-Oxley Act
31.2*	Certification of Quarterly Report on Form 10-Q for the period ended June 30, 2011 by Sylvester J. Johnson, Vice President, Corporate Controller and Interim Principal Financial Officer of Dex One Corporation under Section 302 of the Sarbanes-Oxley Act
32.1*	Certification of Quarterly Report on Form 10-Q for the period ended June 30, 2011, under Section 906 of the Sarbanes-Oxley Act by Alfred T. Mockett, Chief Executive Officer and President, and Sylvester J. Johnson, Vice President, Corporate Controller and Interim Principal Financial Officer, for Dex One Corporation
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith.
^	Management contract or compensatory plan

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SIGNATURES

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

	DEX ONE CORPORATION
Date: August 4, 2011	By:	/s/ Sylvester J. Johnson
		Sylvester J. Johnson
		Vice President, Corporate Controller, Interim Principal Financial Officer and Chief Accounting Officer (Interim Principal Financial Officer) (Principal Accounting Officer)

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Exhibit Index

Exhibit No.	Document
10.1*^	Severance Agreement and Release, dated April 7, 2011, by and between Dex One Corporation and Sean Greene.
10.2*^	Severance Agreement and Release, dated April 26, 2011, by and between Dex One Corporation and George Bednarz.
10.3^	Separation Agreement, dated May 25, 2011, by and between Dex One Corporation, R.H. Donnelley Inc., Dex Media West, Inc., Dex Media East, Inc. and Steven M. Blondy (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 26, 2011, Commission File No. 001-07155).
31.1*	Certification of Quarterly Report on Form 10-Q for the period ended June 30, 2011 by Alfred T. Mockett, Chief Executive Officer and President of Dex One Corporation under Section 302 of the Sarbanes-Oxley Act
31.2*	Certification of Quarterly Report on Form 10-Q for the period ended June 30, 2011 by Sylvester J. Johnson, Vice President, Corporate Controller and Interim Principal Financial Officer of Dex One Corporation under Section 302 of the Sarbanes-Oxley Act
32.1*	Certification of Quarterly Report on Form 10-Q for the period ended June 30, 2011, under Section 906 of the Sarbanes-Oxley Act by Alfred T. Mockett, Chief Executive Officer and President, and Sylvester J. Johnson, Vice President, Corporate Controller and Interim Principal Financial Officer, for Dex One Corporation
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith.
^	Management contract or compensatory plan

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EX-10.1

EXHIBIT 10.1

Execution Copy

SEVERANCE AGREEMENT AND RELEASE

     THIS SEVERANCE AGREEMENT AND RELEASE (this “Agreement”) is made by and between Sean Greene (hereinafter referred to as “Employee”), and Dex One Corporation (hereinafter, unless the context indicates to the contrary, is deemed to include its subsidiaries, affiliates, and predecessors referred to as “Dex One” or the “Company”).

          WITNESSETH THAT:

          WHEREAS, Employee was employed by the Company since the date specified in Appendix B; and

          WHEREAS, Employee has been terminated from the Company as of the date set forth in Appendix B;

          WHEREAS, the parties to this Agreement desire to enter into an agreement memorializing certain benefits and severance compensation payable to Employee;

          NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and of the actions taken pursuant to this Agreement, the parties agree as follows:

          1. Employee’s employment with the Company is terminated, pursuant to Sections 3.1 and 4.2 of the Dex One Corporation Severance Plan — Senior Vice President (the “Plan”), a copy of which is attached to this Agreement as Appendix A, effective on the date specified in Appendix B (“Eligible Termination Date”).

          2. Employee shall be entitled to, and Company hereby agrees to provide to Employee, the benefits and severance payments, as well as any other entitlements, set forth in the Plan, in accordance with the provisions of the Plan; provided, however, that in lieu of the Pro Rata Bonus Payout (as defined in the Plan) to which Employee would otherwise be entitled under the Plan, Employee shall be entitled to additional severance compensation in the amount of Forty-One Thousand Two Hundred Fifty Dollars ($41,250) (the “Additional Severance”). Employee acknowledges receipt of the full amount of the Additional Severance, net of all applicable withholding taxes. In addition, Employee shall continue to participate in the R.H. Donnelley Corporation 2009 Long-Term Incentive Program for Executive Officers (the “2009 LTIP”) and shall be eligible to receive a payment of up to Three Hundred Thirty-Seven Thousand Five Hundred Dollars ($337,500) on or about March 15, 2012 in accordance with the provisions of the 2009 LTIP and subject to the satisfaction of the performance standards under the 2009 LTIP. Employee acknowledges that any such payment will be in complete satisfaction of any amounts owed pursuant to the 2009 LTIP and that following such payment Employee shall have no further rights thereunder. Any payment made under the 2009 LTIP shall be reduced by all applicable withholding taxes. In addition, Employee shall be entitled to a cost of living adjustment payment in the amount of Six Thousand Dollars ($6,000) (the “COLA Payment”). Employee acknowledges receipt of the full amount of the COLA Payment, grossed up for all applicable withholding taxes. In consideration of any severance benefits provided to Employee pursuant to the Plan, Employee agrees that he shall be reasonably available to consult by telephone, e-mail, in person and at mutually convenient times, dates and locations on matters relating to the Company, and shall cooperate fully with respect to any claims, litigation or investigations, relating to the Company.

          3. For the purpose of this Agreement, the terms “Confidential Information,” “Proprietary Information” and “Trade Secrets” shall include, but not be limited to, all information not generally known to the public at large relating to Dex One’s business and business practices (in the broadest sense), which is obtained, observed or developed by Employee as a consequence of or throughout the employment relationship with Dex One and which, if lost, disclosed, compromised or used other than in performance of Employee’s assigned job duties, could potentially result in (a) any loss of business, competitive

disadvantage, financial or operational damage, embarrassment and/or any loss of goodwill to or for Dex One or (b) unfair competitive advantage to any competitor. Examples of Dex One Trade Secrets, Confidential Information and Proprietary Information include, but are not limited to, patterns, processes, formulas, computer and training programs, models, devices, designs, compilations, promotional, marketing and sales programs and strategies, profit and margin data, market and/or product research and development data, pricing policies, marketing and promotional campaigns, operational policies, procedures, methods, processes and materials, lists of customers and clients, customer preferences, business strategies and methodologies, strategic or business plans, training manuals and methodologies, employee personnel data, incentive packages, compensation data and employee performance data, and related information or data that Dex One furnishes to or obtains from its customers, partners, clients, subsidiaries, parent or related organizations, all of which Dex One asserts provides Dex One with an opportunity to obtain an advantage over competitors who do not have access to the same information. In addition, the parties acknowledge that (a) Dex One has in the past and may in the future devote significant time, effort and money to identifying and attracting new clients and expanding into new markets, (b) Dex One enjoys a widespread reputation for quality and service which has earned Dex One valuable good-will, and (c) Dex One’s recruitment and training of high quality sales, marketing and operations personnel is a significant factor in its success, (d) so that accordingly all relevant information concerning each of these factors shall also be deemed to constitute Dex One Trade Secrets, Confidential Information and Proprietary Information. Without limiting the generality of the foregoing, the existence and terms and conditions of this Severance Agreement and Release shall also constitute Confidential Information of Dex One.

          4. The parties acknowledge that as a result of Employee’s employment relationship with Dex One, Employee has been exposed to and has had access to Dex One’s Trade Secrets, Confidential Information and Proprietary Information, the disclosure or unauthorized use of which would cause irreparable harm to Dex One. Accordingly, the parties agree to the following provisions:

          (a) Employee will not for all time use or use for others or in any way assist others to use, disclose, communicate, furnish, divulge or make accessible to others, any of Dex One’s Trade Secrets, Proprietary Information or Confidential Information, unless authorized to do so by Dex One in writing; and

          (b) Upon Employee’s Eligible Termination Date or at any time prior to the Eligible Termination Date as the Company may request, Employee will immediately return to Dex One any and all property, documents or records in the Employee’s possession, custody or control that constitute Dex One’s Trade Secrets, Proprietary Information or Confidential Information; provided, however, that Employee may retain a copy of his electronic contacts file.

          5. Employee shall not make any (i) derogatory statement about the Company or its officers or employees or (ii) written or oral statement, news release or other announcement relating to Employee’s employment by the Company or relating to the Company, its business, affiliates, business partners, clients, customers or personnel, in each case which is designed or reasonably likely to embarrass, malign, criticize or defame or result in the disrepute of any of the foregoing persons.

          6. To the extent the Company is not obligated to publicly disclose some or all of the terms of this Agreement (either in a filing with the Securities and Exchange Commission or otherwise), Employee agrees:

          (a) to keep the existence and terms of this Agreement in strict confidence, provided that Employee may disclose the terms of the Agreement to his immediate family, state or federal administrative agencies including taxing authorities, and those with a legal or financial need to know, such as his lawyer or accountant, in which case, Employee is required to disclose to the receiving party, in full, the confidentiality and non-disparagement provisions within this Agreement, and Employee shall bear full responsibility for any breach of such provisions by the receiving party; and

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          (b) that he will not discuss the terms of this Agreement, or the fact that a monetary payment was made with any third party (except those with a legal or financial need to know), including without limitation any former, present, or future employee of the Company.

          This paragraph specifically prohibits disclosure of any of the alleged facts and circumstances that form the basis of Employee’s termination of employment. This Agreement shall not be admissible in any legal proceeding except in an action to enforce this Agreement or in litigation arising out of the alleged breach of this Agreement.

          Employee further agrees that if he is required to make disclosures regarding the Company or this Agreement pursuant to a subpoena or judicial or administrative order, he shall immediately notify the General Counsel of the Company in writing upon its receipt and prior to responding to such subpoena or order.

          7. Employee agrees that in the event of any breach of the covenants contained in paragraphs 1, 2, 3, 4, 5 or 6, in addition to any other legal or equitable remedies that may be available to the Company, the Company may (a) obtain specific performance against Employee and/or (b) cease all payments required to be made to Employee under the Plan and this Agreement and recover all such payments previously made to Employee pursuant to the Plan and this Agreement. The foregoing sentence is not intended, nor shall it be construed, to limit Employee’s right to dispute the factual basis underlying any claim by the Company for such remedy. The parties agree and acknowledge that any such breach or threatened breach would cause irreparable injury to the Company that cannot reasonably or adequately be quantified and that such relief does not constitute in any way a penalty or forfeiture. Employee further acknowledges that if any action in law or in equity is necessary to enforce or interpret the terms of this Agreement, the non-prevailing party shall be responsible for all reasonable costs and expenses, including attorneys’ fees, incurred by the prevailing party.

          8. In consideration of the covenants of the Company set forth herein and the other valuable consideration and benefits provided to Employee by the Company hereunder, and as required by the Plan, Employee, Employee’s family, representatives, heirs, executors, administrators, successors and assigns release and forever discharge the Company and its successors, assigns, subsidiaries and affiliates, and their respective past and present directors, officers, employees, attorneys, agents, insurers, and their employee benefit plans and programs and their trustees, fiduciaries or administrators (hereafter referred to collectively as “Releasees”) from any and all claims, demands, debts, damages, injuries, actions or rights of action of any nature whatsoever, whether known or unknown which Employee had, now has or may have against the Company and any or all Releasees from the beginning of Employee’s employment to and including the date of this Agreement relating to or arising out of Employee’s employment with the Company or the termination of such employment, whether based on tort, contract (express or implied, oral or written), common law, or any federal, state, or local statute, regulation, ordinance, or other law, other than a claim with respect to a vested right Employee may have to receive benefits under any plan maintained by the Company or where such a release is otherwise prohibited by law. Employee represents that Employee has not filed any action, complaint, charge, grievance or arbitration against the Company or any of the Releasees. By releasing the claims described in this Paragraph 8, Employee does not waive any claims that cannot be waived as a matter of law.

          Employee understands that there are various federal, state, and local laws that prohibit employment discrimination on the basis of, among other things, age, sex, race, color, national origin, religion, and disability, and that these laws are enforced by various government agencies. Employee intends to give up any rights Employee may have under these laws or any other federal or state statute or common law. Employee understands that his waiver of claims and his release as contained in this Agreement includes, but is not limited to, claims for breach of an implied or express employment contract, claims for wrongful discharge, claims under the Age Discrimination in Employment Act, claims under the Older Workers Benefits Protection Act, claims under the Americans with Disabilities Act, claims under Title VII of the Civil Rights Act of 1964, claims under Sections 1981 through 1988 of Title 42 of the United States Code, claims under The Employee Retirement Income Security Act of 1974, except for any vested benefits under any tax qualified benefit plan, claims under The Immigration Reform and Control Act,

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claims under the Worker Adjustment and Retraining Notification Act and any state layoff or plant closing law, claims under The Fair Credit Reporting Act, claims under The Family and Medical Leave Act, claims under The Equal Pay Act, claims under The Sarbanes-Oxley Act, to the extent permitted by law, claims under the California Fair Employment and Housing Act, claims under federal and state family leave laws, employment and discrimination claims under California or North Carolina law, and any other claims pursuant to any other federal, state, or local law or regulation regarding discrimination or employment.

          9. Employee understands and expressly agrees that this Agreement extends to all claims of every nature and kind whatsoever, known or unknown, suspected or unsuspected, past or present, which Employee has or may have against the Company and Releasees, and all rights under section 1542 of the California Civil Code are hereby expressly waived by Employee. Such section reads as follows:

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.

          Employee agrees that he has read this Agreement, including the general release provisions and the waiver of California Civil Code Section 1542. Employee further agrees that he has had the opportunity to consult an attorney about the Agreement and specifically about the waiver of Civil Code Section 1542. Employee acknowledges that he understands this Agreement and the Civil Code Section 1542 waiver. Employee also affirms that he freely and knowingly enters into this Agreement.

          Employee acknowledges that he may later discover facts different from or in addition to those he knows or now believes to be true with respect to the matters released or described in this Agreement. Employee agrees that the releases and agreements set forth in this Agreement will remain effective in all respects notwithstanding any later discovery by Employee of any different or additional facts. Employee agrees that he assumes any and all risk of any mistake in connection with the true facts involved in the matters, disputes, or controversies described in this Agreement.

          10. Employee affirms he has not filed, caused to be filed, or is presently a party to any claim, complaint, or action against the Company or any of the Releasees in any forum or form. Employee also affirms he has been paid or has received all leave (paid or unpaid), compensation, wages, bonuses, commissions, severance or benefits to which he may be entitled up to the date of this Agreement, and that no other leave (paid or unpaid), compensation, wages, bonuses, commissions, severance or benefits are due to him, except as provided in this Agreement. Employee also affirms he has no known workplace injuries or occupational diseases, and that he has been provided or has not been denied any leave requested under the Family and Medical Leave Act or any other state or local law providing for leave. Employee also affirms that he has not divulged any proprietary or confidential information of the Company and will continue to maintain the confidentiality of such information consistent with the Company’s policies and his agreement(s) with the Company and/or common law.

          Employee further affirms that he has not been retaliated against for reporting any allegations of wrongdoing by any Releasees, including but not limited to the Company and it officers, including any allegations of corporate fraud. Both Parties acknowledge that this Agreement does not limit either party’s right, where applicable, to file or participate in an investigative proceeding of any federal, state or local government agency. To the extent permitted by law, Employee agrees that if such administrative claim is made, he shall not be entitled to recover any individual monetary relief or other individual remedies.

          Employee affirms that all of the Company’s decisions regarding Employee’s pay and benefits through the date of Employee’s separation of employment were not discriminatory based on age, disability, race, color, sex, religion, national origin or any other classification protected by law.

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          11. Except as otherwise prohibited by law, Employee covenants that neither Employee, nor any of Employee’s respective heirs, representatives, successors or assigns, will commence, prosecute or cause to be commenced or prosecuted against the Company or any of the Releasees any action or other proceeding based upon any claims, demands, causes of action, obligations, damages or liabilities which are being released by this Agreement, nor will Employee seek to challenge the validity of this Agreement, except that this covenant not to sue does not affect Employee’s future right to enforce appropriately the terms of this Agreement in a court of competent jurisdiction.

          12. Employee acknowledges that:

          (a) Employee has been advised to consult with an attorney of his own choice about the meaning and effect of this Agreement because Employee waives important rights by signing this Agreement, including rights to sue for age discrimination under the Age Discrimination in Employment Act;

          (b) Employee has had a period of twenty-one (21) days within which to consider this Agreement;

          (c) Employee agrees that any modifications, material or otherwise, made to this Agreement do not restart or affect in any manner the original up to twenty-one (21) calendar day consideration period;

          (d) Employee has a period of seven (7) days from the date that Employee signs this Agreement within which to revoke it and that this Agreement will not become effective or enforceable until the expiration of this seven (7) day revocation period. To be effective, Employee’s revocation must be in writing and delivered either by mail or by hand within the 7-calendar day period to: Dex One Corporation, Human Resources, 1001 Winstead Drive, Cary, North Carolina 27513. If by mail, the revocation must be: (1) postmarked within the seven (7) calendar day revocation period, (2) properly addressed, and (3) sent by certified mail, return receipt requested; and

          (e) Employee fully understands the terms and contents of this Agreement and freely, voluntarily, knowingly and without coercion enters into this Agreement. Employee also understands and agrees that Employee would not receive the monies and/or benefits specified herein, except for Employee’s execution of this Agreement and the fulfillment of the promises herein contained.

          13. This Agreement and the Appendices hereto constitute the entire agreement of the parties with respect to the subject matter hereof and all prior negotiations or representations between the parties with respect to the subject matter of this Agreement are superseded hereby. It shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns, heirs and legal representatives but neither this Agreement nor any rights hereunder shall be assignable by Employee without the Company’s written consent. This Agreement may be amended only by a subsequent written agreement executed by both an officer of Dex One and by the Employee named herein.

          14. If for any reason any one or more of the provisions of this Agreement shall be held or deemed to be inoperative, unenforceable or invalid by a court of competent jurisdiction, such circumstances shall not have the effect of rendering such provision invalid in any other case or rendering any other provisions of this Agreement inoperative, unenforceable or invalid, and all such other provisions shall remain in full force and effect, and it is the express intent of the parties that any such affected provision shall be read by such court to be as broad and restrictive as possible without being found to be inoperative, unenforceable or invalid.

          15. This Agreement shall be construed in accordance with the laws of the State of California (without regard to the state’s conflict of law provisions), except to the extent superseded by applicable federal law. Employee expressly consents that any action or proceeding relating to this Agreement initiated by Employee will only be brought in a court located in Los Angeles, California.

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          16. The parties agree that neither this Agreement nor the furnishing of the consideration for this Agreement shall be deemed or construed at any time for any purpose as an admission by Releasees of wrongdoing or evidence of any liability or unlawful conduct of any kind.

          IN WITNESS WHEREOF, Employee and Dex One Corporation, by its duly authorized officer, have hereunder executed this Agreement.

Dated: April 7, 2011	/s/ Sean Greene
	Sean Greene

DEX ONE CORPORATION
By:	/s/ Gretchen Zech
	Name:	Gretchen Zech
	Title:	SVP/Human Resources

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APPENDIX A

Dex One Corporation
Severance Plan — Senior Vice President

[Copy Attached]

APPENDIX B

Employee’s Hire Date was: August 4, 2003

Employee’s Termination Date is: March 31, 2011

EX-10.2

EXHIBIT 10.2

Execution Copy

SEVERANCE AGREEMENT AND RELEASE

     THIS SEVERANCE AGREEMENT AND RELEASE (this “Agreement”) is made by and between George Bednarz (hereinafter referred to as “Employee”), and Dex One Corporation (hereinafter, unless the context indicates to the contrary, is deemed to include its subsidiaries, affiliates, and predecessors referred to as “Dex One” or the “Company”).

          WITNESSETH THAT:

          WHEREAS, Employee was employed by the Company since the date specified in Appendix B; and

          WHEREAS, Employee has been terminated from the Company as of the date set forth in Appendix B;

          WHEREAS, the parties to this Agreement desire to enter into an agreement memorializing certain benefits and severance compensation payable to Employee;

          NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and of the actions taken pursuant to this Agreement, the parties agree as follows:

          1. Employee’s employment with the Company is terminated, pursuant to Sections 3.1 and 4.2 of the Dex One Corporation Severance Plan — Senior Vice President (the “Plan”), a copy of which is attached to this Agreement as Appendix A, effective on the date specified in Appendix B (“Eligible Termination Date”).

          2. Employee shall be entitled to, and Company hereby agrees to provide to Employee, the benefits and severance payments, as well as any other entitlements, set forth in the Plan, in accordance with the provisions of the Plan; provided, however, that in lieu of the Pro Rata Bonus Payout (as defined in the Plan) to which Employee would otherwise be entitled under the Plan, Employee shall be entitled to additional severance compensation in the amount of Seventy-Five Thousand Dollars ($75,000) (the “Additional Severance”). Employee acknowledges receipt of the full amount of the Additional Severance, net of all applicable withholding taxes. In addition, Employee shall continue to participate in the R.H. Donnelley Corporation 2009 Long-Term Incentive Program for Executive Officers (the “2009 LTIP”) and shall be eligible to receive a payment of up to One Million Dollars ($1,000,000) on or about March 15, 2012 in accordance with the provisions of the 2009 LTIP and subject to the satisfaction of the performance standards under the 2009 LTIP. Employee acknowledges that any such payment will be in complete satisfaction of any amounts owed pursuant to the 2009 LTIP and that following such payment Employee shall have no further rights thereunder. Any payment made under the 2009 LTIP shall be reduced by all applicable withholding taxes. In consideration of any severance benefits provided to Employee pursuant to the Plan, Employee agrees that he shall be reasonably available to consult by telephone, e-mail, in person and at mutually convenient times, dates and locations on matters relating to the Company, and shall cooperate fully with respect to any claims, litigation or investigations, relating to the Company.

          3. For the purpose of this Agreement, the terms “Confidential Information,” “Proprietary Information” and “Trade Secrets” shall include, but not be limited to, all information not generally known to the public at large relating to Dex One’s business and business practices (in the broadest sense), which is obtained, observed or developed by Employee as a consequence of or throughout the employment relationship with Dex One and which, if lost, disclosed, compromised or used other than in performance of Employee’s assigned job duties, could potentially result in (a) any loss of business, competitive disadvantage, financial or operational damage, embarrassment and/or any loss of goodwill to or for Dex One or (b) unfair competitive advantage to any competitor. Examples of Dex One Trade Secrets,

Confidential Information and Proprietary Information include, but are not limited to, patterns, processes, formulas, computer and training programs, models, devices, designs, compilations, promotional, marketing and sales programs and strategies, profit and margin data, market and/or product research and development data, pricing policies, marketing and promotional campaigns, operational policies, procedures, methods, processes and materials, lists of customers and clients, customer preferences, business strategies and methodologies, strategic or business plans, training manuals and methodologies, personnel data, incentive packages, compensation data and employee performance data, securities transactions by employees, and related information or data that Dex One furnishes to or obtains from its customers, partners, clients, subsidiaries, parent or related organizations, all of which Dex One asserts provides Dex One with an opportunity to obtain an advantage over competitors who do not have access to the same information. In addition, the parties acknowledge that (a) Dex One has in the past and may in the future devote significant time, effort and money to identifying and attracting new clients and expanding into new markets, (b) Dex One enjoys a widespread reputation for quality and service which has earned Dex One valuable good-will, and (c) Dex One’s recruitment and training of high quality sales, marketing and operations personnel is a significant factor in its success, (d) so that accordingly all relevant information concerning each of these factors shall also be deemed to constitute Dex One Trade Secrets, Confidential Information and Proprietary Information. Without limiting the generality of the foregoing, the existence and terms and conditions of this Severance Agreement and Release shall also constitute Confidential Information of Dex One.

          4. The parties acknowledge that as a result of Employee’s employment relationship with Dex One, Employee has been exposed to and has had access to Dex One’s Trade Secrets, Confidential Information and Proprietary Information, the disclosure or unauthorized use of which would cause irreparable harm to Dex One. Accordingly, the parties agree to the following provisions:

          (a) Employee will not for all time use or use for others or in any way assist others to use, disclose, communicate, furnish, divulge or make accessible to others, any of Dex One’s Trade Secrets, Proprietary Information or Confidential Information, unless authorized to do so by Dex One in writing; and

          (b) Upon Employee’s Eligible Termination Date or at any time prior to the Eligible Termination Date as the Company may request, Employee will immediately return to Dex One any and all property, documents or records in the Employee’s possession, custody or control that constitute Dex One’s Trade Secrets, Proprietary Information or Confidential Information; provided, however, that Employee may retain a copy of his electronic contacts file.

          5. During the twelve (12) months following the Eligible Termination Date, Employee will not engage in any of the following activities on Employee’s own behalf or in any capacity on behalf of another person, company or other entity (collectively “others”):

          (a) Engage in any business (or assist others to engage in any business) that is Directly Competitive with Dex One’s Business;

          (b) Have any Material Interest in any person, company or entity that is Directly Competitive with Dex One’s Business;

          (c) Directly or indirectly induce, encourage or solicit an employee of Dex One to terminate his or her employment with Dex One; or

          (d) Solicit, accept business from, serve, divert, or assist others in soliciting, accepting business from, serving or diverting any Customer or Prospective Customer of Dex One with whom Employee had any contact on behalf of Dex One during the last twelve months of Employee’s employment with Dex One.

          As used in this Paragraph 5, the following terms shall have the meanings specified immediately below:

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• “Dex One’s Business” means the provision of a broad range of marketing products and services to generate customer leads for local, regional and national businesses, including developing messaging, optimizing marketing programs and leveraging products such as online and mobile search solutions, print and online yellow pages directories, voice based search platforms, a large pay-per-click ad network, and related products and services.

• “Directly Competitive” means any business or activity that is the same as or substantially similar to Dex One’s Business.

• “Material Interest” means the ownership of more than five percent (5%) of the total outstanding equity of a company or other entity, or the right to control the management, operations or affairs of others, or the exercise of control over or the management of others.

• “Customer” means any person, company or other entity that has entered into an agreement or similar business arrangement with Dex One relating to Dex One’s Business.

• “Prospective Customer” means any person, company or other entity that Dex One reasonably identifies as a potential customer and who, at any time during the last twelve months of Employee’s employment with Dex One, Employee had knowledge that Dex One has had contact with concerning that person, company or other entity becoming a customer of Dex One.

Each of Employee’s obligations under this Agreement shall benefit each of Dex One’s parent, subsidiary and affiliated companies (each a “Related Company”) to the same extent as if such obligations were expressly and separately stated as being owed to each Related Company and that each Related Company is intended to be a third party beneficiary of this Agreement and is entitled to enforce the provisions in this Agreement included for its protection.

Employee agrees to disclose the foregoing covenants and restrictions set forth in this Paragraph 5 to all of Employee’s prospective employers during the duration of the covenants set forth above. Employee also agrees and acknowledges that this Agreement does not impair Employee’s ability to earn a livelihood, is not a restraint on trade, and that the restrictions and provisions set forth herein are reasonable in time and geographic scope.

          6. Employee shall not make any (i) derogatory statement about the Company or its officers or employees or (ii) written or oral statement, news release or other announcement relating to Employee’s employment by the Company or relating to the Company, its business, affiliates, business partners, clients, customers or personnel, in each case which is designed or reasonably likely to embarrass, malign, criticize or defame or result in the disrepute of any of the foregoing persons.

          7. To the extent the Company is not obligated to publicly disclose some or all of the terms of this Agreement (either in a filing with the Securities and Exchange Commission or otherwise), Employee agrees:

          (a) to keep the existence and terms of this Agreement in strict confidence, except as required by Paragraph 5 above and applicable law, provided that Employee may disclose the terms of the Agreement to his immediate family, state or federal administrative agencies including taxing authorities, and those with a legal or financial need to know, such as his lawyer or accountant, in which case, Employee is required to disclose to the receiving party, in full, the confidentiality and non-disparagement provisions within this Agreement, and Employee shall bear full responsibility for any breach of such provisions by the receiving party; and

          (b) that he will not discuss the terms of this Agreement, or the fact that a monetary payment was made with any third party (except those with a legal or financial need to know), including without limitation any former, present, or future employee of the Company.

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          This paragraph specifically prohibits disclosure of any of the alleged facts and circumstances that form the basis of Employee’s termination of employment. This Agreement shall not be admissible in any legal proceeding except in an action to enforce this Agreement or in litigation arising out of the alleged breach of this Agreement.

          Employee further agrees that if he is required to make disclosures regarding the Company or this Agreement pursuant to a subpoena or judicial or administrative order, he shall immediately notify the General Counsel of the Company in writing upon its receipt and prior to responding to such subpoena or order.

          8. Employee agrees that in the event of any breach of the covenants contained in paragraphs 1, 2, 3, 4, 5 (particularly, but not limited to, disclosure of the existence or terms of this Agreement), 6 or 7, in addition to any other legal or equitable remedies that may be available to the Company, the Company may (a) obtain specific performance against Employee and/or (b) cease all payments required to be made to Employee under the Plan and this Agreement and recover all such payments previously made to Employee pursuant to the Plan and this Agreement. The foregoing sentence is not intended, nor shall it be construed, to limit Employee’s right to dispute the factual basis underlying any claim by the Company for such remedy. The parties agree and acknowledge that any such breach or threatened breach would cause irreparable injury to the Company that cannot reasonably or adequately be quantified and that such relief does not constitute in any way a penalty or forfeiture. Employee further acknowledges that if any action in law or in equity is necessary to enforce or interpret the terms of this Agreement, the non-prevailing party shall be responsible for all reasonable costs and expenses, including attorneys’ fees, incurred by the prevailing party.

          9. In consideration of the covenants of the Company set forth herein and the other valuable consideration and benefits provided to Employee by the Company hereunder, and as required by the Plan, Employee, Employee’s family, representatives, heirs, executors, administrators, successors and assigns release and forever discharge the Company and its successors, assigns, subsidiaries and affiliates, and their respective past and present directors, officers, employees, attorneys, agents, insurers, and their employee benefit plans and programs and their trustees, fiduciaries or administrators (hereafter referred to collectively as “Releasees”) from any and all claims, demands, debts, damages, injuries, actions or rights of action of any nature whatsoever, whether known or unknown, asserted or unasserted, which Employee had, now has or may have against the Company and any or all Releasees from the beginning of Employee’s employment to and including the date of this Agreement relating to or arising out of Employee’s employment with the Company or the termination of such employment, whether based on tort, contract (express or implied, oral or written), common law, or any federal, state, or local statute, regulation, ordinance, or other law, other than a claim with respect to a vested right Employee may have to receive benefits under any plan maintained by the Company. Employee represents that Employee has not filed any action, complaint, charge, grievance or arbitration against the Company or any of the Releasees. By releasing the claims described in this Paragraph 9, Employee does not waive any claims that cannot be waived as a matter of law.

          Employee understands that there are various federal, state, and local laws that prohibit employment discrimination on the basis of, among other things, age, sex, race, color, national origin, religion, and disability, and that these laws are enforced by various government agencies. Employee intends to give up any rights Employee may have under these laws or any other federal or state statute or common law. Employee understands that his waiver of claims and his release as contained in this Agreement includes, but is not limited to, claims for breach of an implied or express employment contract, claims for wrongful discharge, claims under the Age Discrimination in Employment Act, claims under the Older Workers Benefits Protection Act, claims under the Americans with Disabilities Act, claims under Title VII of the Civil Rights Act of 1964, claims under Sections 1981 through 1988 of Title 42 of the United States Code, claims under The Employee Retirement Income Security Act of 1974, except for any vested benefits under any tax qualified benefit plan, claims under The Immigration Reform and Control Act, claims under the Worker Adjustment and Retraining Notification Act and any state layoff or plant closing law, claims under The Fair Credit Reporting Act, claims under The Family and Medical Leave Act, claims under The Equal Pay Act, claims under The Sarbanes-Oxley Act, to the extent permitted by law, claims

4

under The North Carolina Equal Employment Practices Act, claims under The North Carolina Parental Leave Law for School Involvement, claims under The North Carolina Smokers’ Rights Law, claims under The North Carolina Persons With Disabilities Protection Act, claims under The North Carolina Communicable Disease Law, claims under The North Carolina Discrimination on the Basis of Sickle Cell Trait Law, claims under The North Carolina Genetic Testing Law, claims under The North Carolina Retaliatory Employment Discrimination Law, claims under The North Carolina Wage and Hour Act, claims under The North Carolina Occupational Safety and Health Act, as amended, and any other claims pursuant to any other federal, state, or local law or regulation regarding discrimination or employment.

          10. Employee affirms he has not filed, caused to be filed, or is presently a party to any claim, complaint, or action against the Company or any of the Releasees in any forum or form. Employee also affirms he has been paid or has received all leave (paid or unpaid), compensation, wages, bonuses, commissions, severance or benefits to which he may be entitled up to the date of this Agreement, and that no other leave (paid or unpaid), compensation, wages, bonuses, commissions, severance or benefits are due to him, except as provided in this Agreement. Employee also affirms he has no known workplace injuries or occupational diseases, and that he has been provided or has not been denied any leave requested under the Family and Medical Leave Act or any other state or local law providing for leave. Employee also affirms that he has not divulged any proprietary or confidential information of the Company and will continue to maintain the confidentiality of such information consistent with the Company’s policies and his agreement(s) with the Company and/or common law.

          Employee further affirms that he has not been retaliated against for reporting any allegations of wrongdoing by any Releasees, including but not limited to the Company and it officers, including any allegations of corporate fraud. Both Parties acknowledge that this Agreement does not limit either party’s right, where applicable, to file or participate in an investigative proceeding of any federal, state or local government agency. To the extent permitted by law, Employee agrees that if such administrative claim is made, he shall not be entitled to recover any individual monetary relief or other individual remedies.

          Employee affirms that all of the Company’s decisions regarding Employee’s pay and benefits through the date of Employee’s separation of employment were not discriminatory based on age, disability, race, color, sex, religion, national origin or any other classification protected by law.

          11. Employee covenants that neither Employee, nor any of Employee’s respective heirs, representatives, successors or assigns, will commence, prosecute or cause to be commenced or prosecuted against the Company or any of the Releasees any action or other proceeding based upon any claims, demands, causes of action, obligations, damages or liabilities which are being released by this Agreement, nor will Employee seek to challenge the validity of this Agreement, except that this covenant not to sue does not affect Employee’s future right to enforce appropriately the terms of this Agreement in a court of competent jurisdiction.

          12. Employee acknowledges that:

          (a) Employee has been advised to consult with an attorney of his own choice about the meaning and effect of this Agreement because Employee waives important rights by signing this Agreement, including rights to sue for age discrimination under the Age Discrimination in Employment Act;

          (b) Employee has had a period of twenty-one (21) days within which to consider this Agreement;

          (c) Employee agrees that any modifications, material or otherwise, made to this Agreement do not restart or affect in any manner the original up to twenty-one (21) calendar day consideration period;

5

          (d) Employee has a period of seven (7) days from the date that Employee signs this Agreement within which to revoke it and that this Agreement will not become effective or enforceable until the expiration of this seven (7) day revocation period. To be effective, Employee’s revocation must be in writing and delivered either by mail or by hand within the 7-calendar day period to: Dex One Corporation, Human Resources, 1001 Winstead Drive, Cary, North Carolina 27513. If by mail, the revocation must be: (1) postmarked within the seven (7) calendar day revocation period, (2) properly addressed, and (3) sent by certified mail, return receipt requested; and

          (e) Employee fully understands the terms and contents of this Agreement and freely, voluntarily, knowingly and without coercion enters into this Agreement. Employee also understands and agrees that Employee would not receive the monies and/or benefits specified herein, except for Employee’s execution of this Agreement and the fulfillment of the promises contained herein.

          13. This Agreement and the Appendices hereto constitute the entire agreement of the parties and all prior negotiations or representations between the parties with respect to their subject matter are superseded by this Agreement. It shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns, heirs and legal representatives but neither this Agreement nor any rights hereunder shall be assignable by Employee without the Company’s written consent. In addition, this Agreement supersedes (and evidences the mutual termination of) any prior employment or compensation agreement, whether written, oral or implied in law or implied in fact between Employee and the Company. This Agreement may be amended only by a subsequent written agreement executed by both an officer of Dex One and by the Employee named herein.

          14. If for any reason any one or more of the provisions of this Agreement shall be held or deemed to be inoperative, unenforceable or invalid by a court of competent jurisdiction, such circumstances shall not have the effect of rendering such provision invalid in any other case or rendering any other provisions of this Agreement inoperative, unenforceable or invalid, and all such other provisions shall remain in full force and effect, and it is the express intent of the parties that any such affected provision shall be read by such court to be as broad and restrictive as possible without being found to be inoperative, unenforceable or invalid.

          15. This Agreement shall be construed in accordance with the laws of the State of North Carolina (without regard to the state’s conflict of law provisions), except to the extent superseded by applicable federal law. Employee expressly consents that any action or proceeding relating to this Agreement initiated by Employee will only be brought in a court located in the State of North Carolina.

          16. The parties agree that neither this Agreement nor the furnishing of the consideration for this Agreement shall be deemed or construed at any time for any purpose as an admission by Releasees of wrongdoing or evidence of any liability or unlawful conduct of any kind.

[The remainder of this page is intentionally left blank.]

6

          IN WITNESS WHEREOF, Employee and Dex One Corporation, by its duly authorized officer, have hereunder executed this Agreement.

Dated: April 26, 2011	/s/ George Bednarz
	George Bednarz
	DEX ONE CORPORATION
	By:	/s/ Gretchen Zech
		Name:	Gretchen Zech
		Title:	SVP/Human Resources

7

APPENDIX A

Dex One Corporation
Severance Plan — Senior Vice President

[Copy Attached]

APPENDIX B

Employee’s Original Hire Date was: October 1, 1975

Employee’s Termination Date was: March 31, 2011

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Alfred T. Mockett, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Dex One Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2011	By:	/s/ Alfred T. Mockett
		Alfred T. Mockett
		Chief Executive Officer and President

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Sylvester J. Johnson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Dex One Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2011	By:	/s/ Sylvester J. Johnson
		Sylvester J. Johnson
		Vice President, Corporate Controller and Interim Principal Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report on Form 10-Q of Dex One Corporation for the period ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Dex One Corporation as of the dates and for the periods expressed in the Report.

/s/ Alfred T. Mockett Alfred T. Mockett	/s/ Sylvester J. Johnson Sylvester J. Johnson
Chief Executive Officer and President	Vice President, Corporate Controller and
	Interim Principal Financial Officer
August 4, 2011	August 4, 2011

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Shareholders' (Deficit) Equity
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	50,158,556	50,031,441
Common stock, shares outstanding	50,158,556	50,031,441

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Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (USD $) In Thousands, except Per Share data	1 Months Ended	3 Months Ended		5 Months Ended	6 Months Ended
	Jan. 31, 2010 Predecessor Company	Jun. 30, 2011 Successor Company	Jun. 30, 2010 Successor Company	Jun. 30, 2010 Successor Company	Jun. 30, 2011 Successor Company
Net revenues	$ 160,372	$ 377,266	$ 160,891	$ 214,035	$ 768,501
Expenses:
Production and distribution expenses (exclusive of depreciation and amortization shown separately below)	26,949	75,154	49,188	76,751	150,212
Selling and support expenses	40,866	110,844	94,854	154,190	214,904
General and administrative expenses	8,322	36,051	41,138	63,329	74,149
Depreciation and amortization	20,161	61,905	59,581	99,005	115,987
Impairment charges		801,074	769,674	769,674	801,074
Total expenses	96,298	1,085,028	1,014,435	1,162,949	1,356,326
Operating income (loss)	64,074	(707,762)	(853,544)	(948,914)	(587,825)
Gain on sale of assets					13,437
Interest expense, net	(19,656)	(58,059)	(73,423)	(122,357)	(115,779)
Income (loss) before reorganization items, net and income taxes	44,418	(765,821)	(926,967)	(1,071,271)	(690,167)
Reorganization items, net	7,793,132
Income (loss) before income taxes	7,837,550	(765,821)	(926,967)	(1,071,271)	(690,167)
(Provision) benefit for income taxes	(917,541)	163,714	157,044	558,566	143,469
Net income (loss)	6,920,009	(602,107)	(769,923)	(512,705)	(546,698)
Earnings (loss) per share:
Basic	$ 100.30	$ (12.01)	$ (15.39)	$ (10.25)	$ (10.92)
Diluted	$ 100.20	$ (12.01)	$ (15.39)	$ (10.25)	$ (10.92)
Shares used in computing earnings (loss) per share:
Basic	69,013	50,123	50,016	50,013	50,082
Diluted	69,052	50,123	50,016	50,013	50,082
Comprehensive Income (Loss)
Net income (loss)	6,920,009	(602,107)	(769,923)	(512,705)	(546,698)
Amortization of gain on interest rate swaps, net of tax	1,083
Benefit plans adjustment, net of tax	(4,535)	171			171
Comprehensive income (loss)	$ 6,916,557	$ (601,936)	$ (769,923)	$ (512,705)	$ (546,527)

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Document and Entity Information (USD $)	6 Months Ended
	Jun. 30, 2011	Jul. 15, 2011	Jun. 30, 2010
Document and Entity Information [Abstract]
Entity Registrant Name	DEX ONE Corp
Entity Central Index Key	0000030419
Document Type	10-Q
Document Period End Date	Jun. 30, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 670,316,789
Entity Common Stock, Shares Outstanding		50,158,556

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Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes [Abstract]

Income Taxes

7. Income Taxes

Successor Company

Our quarterly income tax (provision) benefit for income taxes is measured using an estimated annual effective tax rate for the period, adjusted for discrete items that occurred within the periods presented. For the three and six months ended June 30, 2011, we recorded an income tax benefit of $163.7 million and $143.5 million, respectively, which represents an effective tax rate of 21.4% and 20.8%, respectively. The effective tax rate for the three and six months ended June 30, 2011 differs from the federal statutory rate of 35.0% primarily due to non-deductible goodwill impairment, changes in deferred tax liabilities related to the stock basis of subsidiaries, changes in recorded valuation allowances and decreases in the liability for unrecognized tax benefits.

The Company recorded a goodwill impairment charge of $801.1 million for the three and six months ended June 30, 2011, of which $457.2 million related to non-deductible goodwill. Impairment of non-deductible goodwill reduced the income tax benefit of the impairment by $174.1 million and reduced our effective tax rate by approximately 22.7% and 25.2% for the three and six months ended June 30, 2011, respectively.

Upon emergence from bankruptcy, the Company recorded deferred tax liabilities related to the excess of the financial statement carrying amount over the tax basis of investments in certain subsidiaries. The estimated annual effective tax rate for the current year includes an estimate of the change in these deferred tax liabilities for the year. The goodwill impairment charge reduced the financial statement carrying amount of investments in certain subsidiaries, which caused a reduction in these deferred tax liabilities. The resulting reduction in income tax expense for the three and six months ended June 30, 2011 relating to the change in these deferred tax liabilities was $72.5 million and $78.9 million, respectively, which increased the effective tax rate for the three and six months ended June 30, 2011 by approximately 9.5% and 11.4%, respectively.

The estimated annual effective tax rate for the current year includes an estimate of the valuation allowance expected to be necessary at the end of the year for originating deferred tax assets. The goodwill impairment charge gave rise to a deferred tax asset whose realization did not meet a more-likely-than-not threshold, requiring a valuation allowance. The resulting increase in income tax expense for the three and six months ended June 30, 2011 relating to the change in valuation allowance is $47.2 million and $46.6 million, respectively, which reduced the effective tax rate for the three and six months ended June 30, 2011 by approximately 6.2% and 6.8%, respectively.

During the three months ended June 30, 2011, the federal statute of limitations relating to a previously unrecognized tax position for revenue recognition closed. The Company has decreased its liability for unrecognized tax benefits associated with this federal and state uncertain tax position by $28.2 million and recorded a net tax benefit of $24.0 million for both the three and six months ended June 30, 2011, respectively, which increased the effective tax rate for the three and six months ended June 30, 2011 by approximately 3.1% and 3.5%, respectively.

For the three and five months ended June 30, 2010, we recorded an income tax benefit of $157.0 million and $558.6 million, respectively, which represents an effective tax rate of 16.9% and 52.1%, respectively. As a result of the goodwill and non-goodwill intangible asset impairment charges during the three and five months ended June 30, 2010, we recognized a non-deductible adjustment to our effective tax rate of $201.8 million for the three and five months ended June 30, 2010.

Internal Revenue Code Section 382 (“Section 382”) imposes limitations on the availability of net operating losses and other corporate tax attributes as ownership changes occur. Under Section 382, potential limitations are triggered when there has been an ownership change, which is generally defined as a greater than 50% change in stock ownership (by value) over a three-year prescribed testing period. Such change in ownership will restrict the Company’s ability to use certain net operating losses and other corporate tax attributes in the future. However, the ownership change does not constitute a change in control under any of the Company’s debt agreements or other contracts. The Company experienced an ownership change in March 2009.

Based upon the closing of the SEC filing period for Schedules 13-G and review of these schedules filed through February 15, 2010, the Company determined that, more likely than not, a certain “check-the-box” election was effective prior to the date of the 2009 ownership change under Section 382. As a result, the Company recorded a tax benefit for the reversal of a liability for unrecognized tax benefit of $351.9 million in the condensed consolidated statement of operations for the five months ended June 30, 2010, which was the primary driver of our effective tax rate for the period.

Predecessor Company

For the one month ended January 31, 2010, the Predecessor Company recorded an income tax provision of $(917.5) million which represents an effective tax rate of 11.7%.

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Reorganization Items, Net

6 Months Ended

Jun. 30, 2011

Reorganization Items, Net [Abstract]

Reorganization Items, Net

3. Reorganization Items, Net

Predecessor Company

Reorganization items directly associated with the process of reorganizing the business under Chapter 11 were recorded on a separate line item on the condensed consolidated statement of operations. The Predecessor Company had recorded $7.8 billion of reorganization items during the one month ended January 31, 2010 comprised of a $4.5 billion gain on reorganization / settlement of liabilities subject to compromise and fresh start accounting adjustments of $3.3 billion. The following table displays the details of reorganization items for the one month ended January 31, 2010:

	Predecessor Company
	One Month Ended
	January 31, 2010
Liabilities subject to compromise	$	6,352,813
Issuance of new Dex One common stock (par value)		(50	)
Dex One additional paid-in capital		(1,450,734	)
Dex One Senior Subordinated Notes		(300,000	)
Reclassified into other balance sheet liability accounts		(39,471	)
Professional fees and other		(38,403	)
Gain on reorganization / settlement of liabilities subject to compromise		4,524,155
Fresh start accounting adjustments:
Goodwill		2,097,124
Write off of deferred revenue and deferred directory costs		655,555
Fair value adjustment to intangible assets		415,132
Fair value adjustment to the amended and restated credit facilities		120,245
Fair value adjustment to fixed assets and computer software		49,814
Write-off of deferred financing costs		(48,443	)
Other fresh start accounting adjustments		(20,450	)
Total fresh start accounting adjustments		3,268,977
Total reorganization items, net	$	7,793,132

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Business Segments

6 Months Ended

Jun. 30, 2011

Business Segments [Abstract]

Business Segments

9. Business Segments

Management reviews and analyzes its business of providing marketing solutions as one operating segment.

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Legal Proceedings

6 Months Ended

Jun. 30, 2011

Legal Proceedings [Abstract]

Legal Proceedings

10. Legal Proceedings

We are subject to various lawsuits, claims, and regulatory and administrative proceedings arising out of our business covering matters such as general commercial, governmental regulations, intellectual property, employment, tax and other actions. In the opinion of management, the ultimate resolution of these matters will not have a material adverse effect on our results of operations, cash flows or financial position.

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Benefit Plans

6 Months Ended

Jun. 30, 2011

Benefit Plans [Abstract]

Benefit Plans

8. Benefit Plans

The following tables provide the components of the Company’s net periodic benefit (credit) cost for the three and six months ended June 30, 2011 and three and five months ended June 30, 2010 and the Predecessor Company’s net periodic benefit (credit) for the one month ended January 31, 2010.

	Pension Benefits
													Predecessor
	Successor Company												Company
	Three Months			Six Months			Three Months			Five Months			One Month
	Ended			Ended			Ended			Ended			Ended
	June 30, 2011			June 30, 2011			June 30, 2010			June 30, 2010			January 31, 2010
Interest cost	$	3,164		$	6,354		$	3,425		$	5,660		$	1,124
Expected return on plan assets		(3,727	)		(7,250	)		(3,328	)		(5,751	)		(1,385	)
Settlement loss		403			403			—			—			—
Curtailment gain		—			—			(3,754	)		(3,754	)		—
Amortization of prior service cost		—			—			—			—			81
Amortization of net loss		—			—			—			—			122
Net periodic benefit (credit)	$	(106	)	$	(493	)	$	(3,657	)	$	(3,845	)	$	(58	)

	Postretirement Benefits
											Predecessor
	Successor Company										Company
	Three Months			Six Months			Three Months		Five Months		One Month
	Ended			Ended			Ended		Ended		Ended
	June 30, 2011			June 30, 2011			June 30, 2010		June 30, 2010		January 31, 2010
Interest cost	$	6		$	12		$	28	$	53	$	10
Amortization of net gain		(192	)		(192	)		—		—		(21	)
Net periodic benefit (credit) cost	$	(186	)	$	(180	)	$	28	$	53	$	(11	)

On May 31, 2011, settlements of Dex Media’s pension plan occurred. 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 expense for the period. These settlements resulted in recognition of an actuarial loss of $0.4 million for the three and six months ended June 30, 2011. Pension expense for Dex Media’s pension plan was recomputed based on assumptions as of May 31, 2011 including a decrease in the discount rate from 5.06% at December 31, 2010 to 4.95%. The Company utilized an outsource provider’s yield curve to determine the appropriate discount rate based on the plan’s expected future cash flows.

During the three and five months ended June 30, 2010, we recognized a curtailment gain of $3.8 million associated with the retirement of our former Chairman and Chief Executive Officer.

The Company made contributions to its pension plans of $1.4 million and $12.8 million during the three and six months ended June 30, 2011, respectively, and $1.2 million and $7.4 million during the three and five months ended June 30, 2010, respectively. The Predecessor Company did not make any contributions to its pension plans during the one month ended January 31, 2010.

The Company made net contributions to its postretirement plans of less than $0.1 million and $0.4 million during the three and six months ended June 30, 2011, respectively, and $1.4 million and $2.2 million during the three and five months ended June 30, 2010, respectively. During the one month ended January 31, 2010, the Predecessor Company made net contributions of $0.4 million to its postretirement plans. We expect to make total net contributions of approximately $16.7 million and $1.1 million to our pension plans and postretirement plans, respectively, in 2011.

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Business and Basis of Presentation

6 Months Ended

Jun. 30, 2011

Business and Basis of Presentation [Abstract]

Business and Basis of Presentation

1. Business and Basis of Presentation

The interim condensed consolidated financial statements of Dex One Corporation and its direct and indirect wholly-owned subsidiaries (“Dex One,” the “Successor Company,” the “Company,” “Parent Company,” “we,” “us” and “our”) have been prepared in accordance with the Securities and Exchange Commission’s (“SEC”) instructions to this Quarterly Report on Form 10-Q and should be read in conjunction with the financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2010. The interim condensed consolidated financial statements include the accounts of Dex One and its direct and indirect wholly-owned subsidiaries. As of June 30, 2011, R.H. Donnelley Corporation, R.H. Donnelley Inc. (“RHDI”), Dex Media, Inc. (“Dex Media”), the legal entity of Business.com, Inc. (“Business.com”) and Dex One Service, Inc. (“Dex One Service”) were our only direct wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated. The results of interim periods are not necessarily indicative of results for the full year or any subsequent period. In the opinion of management, all material adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of financial position, results of operations and cash flows at the dates and for the periods presented have been included.

Dex One became the successor registrant to R.H. Donnelley Corporation (“RHD” or the “Predecessor Company”) upon emergence from Chapter 11 relief under Title 11 of the United States Code (“Chapter 11”) on January 29, 2010 (the “Effective Date”). References to the Predecessor Company in this Quarterly Report on Form 10-Q pertain to periods prior to the Effective Date.

In conjunction with our restructuring plan that commenced during the fourth quarter of 2010 and the resulting changes in our organizational structure, certain prior period amounts included in the unaudited condensed consolidated statements of operations have been reclassified to conform to the current period’s presentation. See Note 4, “Restructuring Charges” for additional information.

Corporate Overview

We are a marketing solutions company that helps local businesses generate leads and manage their presence among consumers in the markets we serve. Our marketing solutions combine multiple media platforms that drive large volumes of leads to our clients. Our locally based marketing consultants offer local businesses personalized marketing consulting services and exposure across these media platforms, including our print, online and mobile yellow pages and search solutions, as well as major search engines.

Our proprietary marketing solutions include our Dex published yellow pages directories, which we co-brand with other recognizable brands in the industry such as CenturyLink and AT&T, our Internet yellow pages site, DexKnows.com ^® and our mobile application, Dex Mobile ^®. Our growing list of marketing solutions also includes local business and market analysis, message and image creation, target market identification, advertising and digital profile creation, keyword and search engine optimization strategies and programs, distribution strategies, social strategies, and tracking and reporting. Our digital affiliate marketing solutions are powered by our search engine marketing product, DexNet™, which extends our clients’ reach to our leading Internet and mobile partners to attract consumers searching for local products and services within our markets.

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Restructuring Charges

6 Months Ended

Jun. 30, 2011

Restructuring Charges [Abstract]

Restructuring Charges

4. Restructuring Charges

During the fourth quarter of 2010, the Company initiated a restructuring plan that includes headcount reductions, consolidation of responsibilities and vacating leased facilities (“Restructuring Actions”), which has continued into 2011. Employees impacted by the Restructuring Actions were notified of their termination during the fourth quarter of 2010 and first and second quarters of 2011. In addition, the Company vacated certain of its leased facilities during the first and second quarters of 2011. As a result of the Restructuring Actions, we have recognized a restructuring charge to earnings of $8.7 million and $14.7 million and made cash payments of $7.6 million and $16.0 million during the three and six months ended June 30, 2011, respectively, related to severance, vacating leased facilities and related restructuring activities. The following tables show the activity in our restructuring reserve associated with the Restructuring Actions during the three and six months ended June 30, 2011.

Three Months Ended June 30, 2011
Balance at March 31, 2011	$	15,413
Additions to reserve charged to earnings		8,713
Non-cash reduction in restructuring reserve		(3,005	)
Payments		(7,568	)
Balance at June 30, 2011	$	13,553
Six Months Ended June 30, 2011
Balance at January 1, 2011	$	17,858
Additions to reserve charged to earnings		14,725
Non-cash reduction in restructuring reserve		(3,005	)
Payments		(16,025	)
Balance at June 30, 2011	$	13,553

The Company anticipates additional charges to earnings related to severance, vacating leased facilities and related restructuring activities in conjunction with the Restructuring Actions during 2011. These amounts have not been determined at this time. Restructuring charges that are charged to earnings are included in production and distribution expenses, selling and support expenses or general and administrative expenses on the consolidated statements of operations, as applicable.

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Long-Term Debt

6 Months Ended

Jun. 30, 2011

Long-Term Debt [Abstract]

Long-Term Debt

5. Long-Term Debt

The following table presents the fair market value of our long-term debt at June 30, 2011 based on quoted market prices on that date, as well as the carrying value of our long-term debt at June 30, 2011, which includes $76.2 million of unamortized fair value adjustments required by GAAP in connection with the Company’s adoption of fresh start accounting on the Fresh Start Reporting Date.

	Fair Market Value		Carrying Value
	June 30, 2011		June 30, 2011
RHDI Amended and Restated Credit Facility	$	658,267	$	968,040
Dex Media East Amended and Restated Credit Facility		512,658		698,854
Dex Media West Amended and Restated Credit Facility		523,428		630,097
Dex One 12%/14% Senior Subordinated Notes due 2017		126,000		300,000
Total Dex One consolidated		1,820,353		2,596,991
Less current portion		224,046		298,907
Long-term debt	$	1,596,307	$	2,298,084

RHDI Amended and Restated Credit Facility

As of June 30, 2011, the outstanding carrying value under the amended and restated RHDI credit facility (“RHDI Amended and Restated Credit Facility”) totaled $968.0 million. The RHDI Amended and Restated Credit Facility requires quarterly principal and interest payments and matures on October 24, 2014. The weighted average interest rate of outstanding debt under the RHDI Amended and Restated Credit Facility was 9.0% at June 30, 2011.

Dex Media East Amended and Restated Credit Facility

As of June 30, 2011, the outstanding carrying value under the amended and restated Dex Media East credit facility (“Dex Media East Amended and Restated Credit Facility”) totaled $698.9 million. The Dex Media East Amended and Restated Credit Facility requires quarterly principal and interest payments and matures on October 24, 2014. The weighted average interest rate of outstanding debt under the Dex Media East Amended and Restated Credit Facility was 2.8% at June 30, 2011.

Dex Media West Amended and Restated Credit Facility

As of June 30, 2011, the outstanding carrying value under the amended and restated Dex Media West credit facility (“Dex Media West Amended and Restated Credit Facility”) totaled $630.1 million. The Dex Media West Amended and Restated Credit Facility requires quarterly principal and interest payments and matures on October 24, 2014. The weighted average interest rate of outstanding debt under the Dex Media West Amended and Restated Credit Facility was 7.0% at June 30, 2011.

Impact of Fresh Start Accounting

In conjunction with our adoption of fresh start accounting, an adjustment was established to record our outstanding debt at fair value on the Fresh Start Reporting Date. The Company was required to record our amended and restated credit facilities at a discount as a result of their fair value on the Fresh Start Reporting Date. Therefore, the carrying amount of these debt obligations is lower than the principal amount due at maturity. A total discount of $120.2 million was recorded upon adoption of fresh start accounting associated with our amended and restated credit facilities, of which $76.2 million remains unamortized at June 30, 2011, as shown in the following table.

					Outstanding Debt at
			Unamortized Fair		June 30, 2011 Excluding the
	Carrying Value at		Value Adjustments		Impact of Unamortized Fair
	June 30, 2011		at June 30, 2011		Value Adjustments
RHDI Amended and Restated Credit Facility	$	968,040	$	12,463	$	980,503
Dex Media East Amended and Restated Credit Facility		698,854		54,121		752,975
Dex Media West Amended and Restated Credit Facility		630,097		9,612		639,709
Dex One 12%/14% Senior Subordinated Notes due 2017		300,000		—		300,000
Total	$	2,596,991	$	76,196	$	2,673,187

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2011

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

6. Derivative Financial Instruments

We do not use derivative financial instruments for trading or speculative purposes and our derivative financial instruments are limited to interest rate swap and interest rate cap agreements. The Company utilizes a combination of fixed rate debt and variable rate debt to finance its operations. The variable rate debt exposes the Company to variability in interest payments due to changes in interest rates. Management believes that it is prudent to mitigate the interest rate risk on a portion of its variable rate borrowings. To satisfy our objectives and requirements, the Company has entered into interest rate swap and interest rate cap agreements, which have not been designated as cash flow hedges, to manage our exposure to interest rate fluctuations on our variable rate debt.

All derivative financial instruments are recognized as either assets or liabilities on the condensed consolidated balance sheets with measurement at fair value. On a quarterly basis, the fair values of our interest rate swaps and interest rate caps are determined based on observable inputs. These derivative instruments have not been designated as cash flow hedges and as such, the initial fair value and any subsequent gains or losses on the change in the fair value of the interest rate swaps and interest rate caps are reported in earnings as a component of interest expense. Any gains or losses related to the quarterly fair value adjustments are presented as a non-cash operating activity on the condensed consolidated statements of cash flows.

By using derivative financial instruments to hedge exposures to changes in interest rates, the Company exposes itself to credit risk and market risk. Credit risk is the possible failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty and, therefore, it is not subject to credit risk. The Company minimizes the credit risk in derivative financial instruments by entering into transactions with major financial institutions with credit ratings of AA- or higher, or the equivalent dependent upon the credit rating agency.

Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

See Note 2, “Summary of Significant Accounting Policies — Fair Value of Financial Instruments” for additional information regarding our interest rate swaps and interest rate caps.

Successor Company

The Company has entered into the following interest rate swaps that effectively convert $500.0 million, or approximately 22%, of the Company’s variable rate debt to fixed rate debt as of June 30, 2011. Since the RHDI Amended and Restated Credit Facility and the Dex Media West Amended and Restated Credit Facility are subject to a LIBOR floor of 3.00% and the LIBOR rate is below that floor at June 30, 2011, both credit facilities are effectively fixed rate debt until such time LIBOR exceeds the stated floor. At June 30, 2011, approximately 88% of our total debt outstanding consisted of variable rate debt, excluding the effect of our interest rate swaps, the LIBOR floors and interest rate caps, which are discussed below. Including the effect of our interest rate swaps, total fixed rate debt comprised approximately 31% of our total debt portfolio as of June 30, 2011. The interest rate swaps mature at varying dates from February 2012 through February 2013.

Interest Rate Swaps — Dex Media East

Effective Dates	Notional Amount			Pay Rates			Maturity Dates
(amounts in millions)
February 26, 2010	$	300	(2)		1.20% - 1.796	%	February 29, 2012 — February 28, 2013
March 5, 2010		100	(1)		1.688	%	January 31, 2013
March 10, 2010		100	(1)		1.75	%	January 31, 2013
Total	$	500

Under the terms of the interest rate swap agreements, we receive variable interest based on the three-month LIBOR and pay a weighted average fixed rate of 1.5%. The weighted average rate received on our interest rate swaps was 0.3% for the six months ended June 30, 2011. These periodic payments and receipts are recorded as interest expense.

Under the terms of the interest rate cap agreements, the Company will receive payments based on the spread in rates if the three-month LIBOR rate increases above the cap rates noted in the table below. The Company paid $2.1 million for the interest rate cap agreements entered into during the first quarter of 2010. We are not required to make any future payments related to these interest rate cap agreements.

Interest Rate Caps — RHDI

Effective Dates	Notional Amount			Cap Rates			Maturity Dates
(amounts in millions)
February 26, 2010	$	200	(3)		3.0% - 3.5	%	February 29, 2012 — February 28, 2013
March 8, 2010		100	(4)		3.5	%	January 31, 2013
March 10, 2010		100	(4)		3.0	%	April 30, 2012
Total	$	400

(1)	Consists of one swap
(2)	Consists of three swaps
(3)	Consists of two caps
(4)	Consists of one cap

The following tables present the fair value of our interest rate swaps and interest rate caps at June 30, 2011 and December 31, 2010. The fair value of our interest rate swaps is presented in accounts payable and accrued liabilities and other non-current liabilities and the fair value of our interest rate caps is presented in prepaid expenses and other current assets and other non-current assets on the condensed consolidated balance sheet at June 30, 2011 and December 31, 2010. The following tables also present the (gain) loss recognized in interest expense from the change in fair value of our interest rate swaps and interest rate caps for the three and six months ended June 30, 2011 and three and five months ended June 30, 2010.

							(Gain) Loss Recognized in
							Interest Expense
							From the Change in Fair Value of
							Interest Rate Swaps
							Three Months			Six Months			Three Months		Five Months
	Fair Value Measurements at						Ended			Ended			Ended		Ended
Interest Rate Swaps	June 30, 2011			December 31, 2010			June 30, 2011			June 30, 2011			June 30, 2010		June 30, 2010
Other non-current assets	$	—		$	—		$	—		$	—		$	2,511	$	—
Accounts payable and accrued liabilities		(4,162	)		(4,376	)		(181	)		(214	)		294		3,428
Other non-current liabilities		(1,678	)		(1,989	)		508			(311	)		1,642		1,642
Total	$	(5,840	)	$	(6,365	)	$	327		$	(525	)	$	4,447	$	5,070

					Loss Recognized in
					Interest Expense
					From the Change in Fair Value of
					Interest Rate Caps
					Three Months		Six Months		Three Months		Five Months
	Fair Value Measurements at				Ended		Ended		Ended		Ended
Interest Rate Caps	June 30, 2011		December 31, 2010		June 30, 2011		June 30, 2011		June 30, 2010		June 30, 2010
Prepaid expenses and other current assets	$	2	$	5	$	—	$	3	$	23	$	66
Other non-current assets		42		303		119		261		1,091		1,520
Total	$	44	$	308	$	119	$	264	$	1,114	$	1,586

The Company recognized losses related to our interest rate swaps and interest rate caps into earnings, including accrued interest, of $2.0 million and $2.8 million during the three and six months ended June 30, 2011, respectively, and $7.1 million and $8.7 million during the three and five months ended June 30, 2010 , respectively.

Predecessor Company

During the one month ended January 31, 2010, the Predecessor Company recognized a loss to interest expense of $2.3 million associated with the change in fair value of interest rate swaps. In addition, the Predecessor Company recognized $3.0 million of losses related to interest rate swaps into earnings, including accrued interest, during the one month ended January 31, 2010.

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands	1 Months Ended	5 Months Ended	6 Months Ended
	Jan. 31, 2010 Predecessor Company	Jun. 30, 2010 Successor Company	Jun. 30, 2011 Successor Company
Cash Flows Provided By Operating Activities	$ 71,741	$ 240,060	$ 212,616
Cash Flows from Investing Activities
Additions to fixed assets and computer software	(1,766)	(15,192)	(14,806)
Proceeds from sale of assets			15,391
Net cash provided by (used in) investing activities	(1,766)	(15,192)	585
Cash Flows from Financing Activities
Credit facilities repayments	(511,272)	(303,436)	(155,001)
Debt issuance costs and other financing items, net	(22,096)	(2,785)	497
(Decrease) increase in checks not yet presented for payment	(3,092)	3,653	(16,905)
Net cash used in financing activities	(536,460)	(302,568)	(171,409)
Increase (decrease) in cash and cash equivalents	(466,485)	(77,700)	41,792
Cash and cash equivalents, beginning of period	665,940	199,455	127,852
Cash and cash equivalents, end of period	199,455	121,755	169,644
Supplemental Information:
Cash interest, net	15,460	69,263	104,566
Cash income taxes, net		$ 2,148	$ 5,524

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2011

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Revenue Recognition

Our advertising revenues are earned primarily from the sale of advertising in yellow pages directories we publish. Advertising revenues also include revenues from our Internet-based marketing solutions including online directories, such as DexKnows.com and DexNet. Advertising revenues are affected by several factors, including changes in the quantity, size and characteristics of advertisements, acquisition of new clients, renewal rates of existing clients, premium advertisements sold, changes in advertisement pricing, the introduction of new marketing solutions, an increase in competition and more fragmentation in the local business search market and general economic factors. Revenues with respect to print advertising and Internet-based marketing solutions that are sold with print advertising are recognized under the deferral and amortization method whereby revenues are initially deferred when a directory is published, net of sales claims and allowances, and recognized ratably over the directory’s life, which is typically 12 months. Revenues with respect to Internet-based marketing solutions that are sold standalone, such as DexNet, are recognized ratably over the life of the contract commencing when they are first delivered or fulfilled. Revenues with respect to our marketing solutions that are non-performance based are recognized ratably over the life of the contract commencing when they are first delivered or fulfilled. Revenues with respect to our marketing solutions that are performance-based are recognized as the service is delivered or fulfilled.

More specifically, we recognize revenue when all of the following criteria have been met:

• Persuasive evidence of an arrangement exists: This criterion is satisfied with the execution of a signed contract between the Company and our client. This contract includes specifications that must be adhered to over the term of the agreement by both parties.

• Delivery has occurred: This criterion is satisfied for our print marketing solutions when physical distribution of a given print directory is substantially complete. This criterion is satisfied for our Internet-based marketing solutions upon fulfillment.

• The fee is fixed or determinable: This criterion is satisfied with the execution of a signed contract between the Company and our client including the final negotiated price.

• Collectability is reasonably assured: This criterion is satisfied by performing credit evaluations of our clients before the signed contract is executed or by requiring our clients to prepay in full for our marketing solutions. Reasonable assurance of collection is also evidenced by a review of the client’s payment history.

Revenue and deferred revenue from the sale of advertising is recorded net of an allowance for sales claims, estimated based primarily on historical experience. We increase or decrease this estimate as information or circumstances indicate that the estimate may no longer represent the amount of claims we may incur in the future.

In September 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements, a consensus of the FASB Emerging Issues Task Force (“ASU 2009-13”). ASU 2009-13 amends the current guidance pertaining to multiple-deliverable revenue arrangements included in FASB Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition — Multiple Element Arrangements to:

• Provide updated guidance on determining whether multiple deliverables exist, how the deliverables in an arrangement should be separated, and how consideration should be allocated;

• Require an entity to allocate revenue in a multiple element arrangement using a selling price hierarchy of (1) vendor specific objective evidence of selling price (“VSOE”), if available; (2) third party evidence of selling price (“TPE”), if VSOE is not available; or (3) estimated selling price, if a vendor does not have either VSOE or TPE; and

• Eliminate the use of the residual method for revenue recognition and require an entity to allocate revenue using the relative selling price method.

The Company adopted ASU 2009-13 effective January 1, 2011 on a prospective basis. The adoption of ASU 2009-13 did not have any impact on our financial position, results of operations or cash flows.

We enter into multiple-deliverable revenue arrangements that may include any combination of our print or Internet-based marketing solutions and that are designed specifically to meet the needs of our clients. Our print and Internet-based marketing solutions are also sold on a stand-alone basis. The timing of delivery or fulfillment of our marketing solutions in a multiple-deliverable arrangement may differ, whereby the fulfillment of Internet-based marketing solutions typically precedes delivery of our print marketing solutions due to the length of time required to produce the final print product. In addition, multiple print directories included in a multiple-deliverable arrangement may be published at different times throughout the year. We limit the amount of revenue recognized for delivered elements to the amount that is not contingent on the future delivery or fulfillment of other marketing solutions included in a multiple-deliverable arrangement. Our print and Internet-based marketing solutions are not inter-dependent. We account for multiple arrangements with a single client as one arrangement if the contractual terms and/or substance of those arrangements indicate that they may be so closely related that they are, in effect, parts of a single arrangement.

We evaluate each deliverable in a multiple-deliverable revenue arrangement to determine whether they represent separate units of accounting using the following criteria:

• The delivered item(s) has value to the customer on a stand-alone basis; and

• If the arrangement includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the Company.

All of our print and Internet-based marketing solutions qualify as separate units of accounting since they are sold on a stand-alone basis and we allocate multiple-deliverable arrangement consideration to each deliverable based on its relative selling price, which is determined using VSOE. Our sales contracts generally do not include any provisions for cancellation, termination, right of return or refunds that would significantly impact recognized revenue.

The objective of VSOE is to determine the price at which a company would transact a sale if the product or service were sold on a stand-alone basis. In determining VSOE, we require that a substantial majority of our selling prices are consistent with our normal pricing and discounting policies, which have been established by management having relevant authority, for the specific marketing solution when sold on a stand-alone basis. We ensure this consistency by performing an analysis on an annual basis or more often if necessary. In determining relative selling prices of our marketing solutions sold on a stand-alone basis, we consider, among other things, (1) the geographies in which our marketing solutions are sold, (2) economic factors, (3) local business conditions, (4) competition in our markets, (5) advertiser and consumer behavior and classifications, (6) gross margin objectives and (7) historical pricing practices. Selling prices are analyzed on a more frequent basis if changes in any of these factors have a material impact on our pricing and discounting policies. There have been no significant changes to our selling prices or methods used to determine VSOE during the three and six months ended June 30, 2011. However, we may modify our pricing and discounting policies or implement new go-to-market strategies in the future, which could result in changes in selling prices, the methodology used to determine VSOE or use of another method in the selling price hierarchy to allocate arrangement consideration. As a result, our future revenue recognition for multiple-deliverable arrangements could differ significantly from our historical results.

For multiple-deliverable arrangements entered into prior to January 1, 2011, our marketing solutions qualified as separate units of accounting and arrangement consideration was allocated to each respective deliverable based on the relative fair value method using VSOE, which was determined using the same methodology described above. Had ASU 2009-13 been effective and applied to multiple-deliverable arrangements in prior reporting periods, there would not have been any impact on revenue recognized in those periods.

Identifiable Intangible Assets and Goodwill

The Company reviews the carrying value of goodwill, definite-lived intangible assets and other long-lived assets whenever events or circumstances indicate that their carrying amount may not be recoverable. The Company reviewed the following information, estimates and assumptions to determine if any indicators of impairment existed during the three and six months ended June 30, 2011:

• Historical financial information, including revenue, profit margins, customer attrition data and price premiums enjoyed relative to competing independent publishers;

• Long-term financial projections, including, but not limited to, revenue trends and profit margin trends;

• Intangible asset carrying values;

• Trading values of our debt and equity securities; and

• Other Company-specific information.

Based upon our announcement in May 2011 of the impending departure of our Executive Vice President and Chief Financial Officer, which subsequently occurred on July 29, 2011, the continued decline in the trading value of our debt and equity securities and revisions made to our long-term forecast, the Company concluded there were indicators of impairment as of May 31, 2011. The Company concluded there were no further triggering events to measure for impairment during the one month ended June 30, 2011.

As a result of identifying indicators of impairment, we performed an impairment test of goodwill in accordance with FASB ASC 350, Intangibles — Goodwill and Other, and an impairment recoverability test of definite-lived intangible assets and other long-lived assets in accordance with FASB ASC 360, Property, Plant and Equipment (“FASB ASC 360”), as of May 31, 2011. Our impairment tests of goodwill, definite-lived intangible assets and other long-lived assets were performed using information, estimates and assumptions noted above and further described below. The Company’s goodwill, definite-lived intangible assets and other long-lived assets have been assigned to the respective reporting unit they represent for impairment testing. As of June 30, 2011, the Company’s reporting units are RHDI, Dex Media East, Inc. (“DME Inc.”) and Dex Media West, Inc. (“DMW Inc.”).

Analysis of Definite-Lived Intangible Assets and Other Long-Lived Assets

The impairment recoverability test of our definite-lived intangible assets and other long-lived assets was performed by comparing the carrying amount of our asset groups including definite-lived intangible assets and other long-lived assets, including goodwill, to the sum of their undiscounted expected future cash flows. In accordance with FASB ASC 360, impairment exists if the sum of the undiscounted expected future cash flows is less than the carrying amount of the intangible asset, or its related group of assets, and other long-lived assets. The testing results of our definite-lived intangible assets and other long-lived assets indicated they were recoverable and thus no impairment test was required as of May 31, 2011.

The fair values of our definite-lived intangible assets and other long-lived assets, which were used in our impairment testing, were determined using unobservable inputs (Level 3 in the fair value hierarchy). The following is a summary of the methodology used in the valuation of each category of definite-lived intangible assets and other long-lived assets:

Directory Services Agreements — The Company has acquired directory services agreements through prior acquisitions. As these directory services agreements have a direct contribution to the financial performance of the business, the Company utilized the multi-period excess earnings method, which is a variant of the income approach, to assign a fair value to these assets. The multi-period excess earnings method uses a discounted cash flow model, whereby the projected cash flows of the intangible asset are computed indirectly, which means that future cash flows are projected with deductions made to recognize returns on appropriate contributory assets, leaving the excess, or residual net cash flow, as indicative of the intangible asset fair value. The multi-period excess earnings method assumes the value derived from the respective asset is greater in the earlier years and steadily declines over time.

Local and National Customer Relationships — The Company has acquired significant local and national customer relationships through prior acquisitions and has also developed significant new local and national customer relationships. These local and national customer relationships provide ongoing and repeat business for the Company. Given the direct contribution made by these local and national customer relationships to the financial performance of the business, the Company utilized the multi-period excess earnings method to assign a fair value to these assets.

Trade Names and Trademarks - The fair value of trade names and trademarks obtained as a result of prior acquisitions was determined based on a variant of the income approach known as the “relief from royalty” method. Under this method, the trade names and trademarks are valued based on the estimated amount of royalty fee that a company would have to pay in a hypothetical arms length transaction to license the assets if they were not owned. Significant assumptions utilized to value these assets were forecasted revenue streams, estimated applicable royalty rates, applicable income tax rates and appropriate discount rates. Royalty rates were estimated based on the assessment of risk and return on investment factors of comparable transactions.

Technology, Advertising Commitments and Other — Certain of the Company’s developed software technology and content assets, which have a direct contribution to the financial performance of the business, were valued using the relief from royalty method discussed above. Other software related assets that are more focused on internal operations were valued under a cost approach, which measures the value of an asset by estimating the expenditures that would be required to replace the asset given its future service capability. Advertising Commitments and other assets were valued using the multi-period excess earnings method.

Fixed Assets - In establishing fair value of our fixed assets, we used the cost approach, where the current replacement cost of the fixed asset being appraised is adjusted for the loss in value caused by physical deterioration, functional obsolescence, and economic obsolescence. In addition to the cost approach, certain assets with an active secondary market were valued using a market approach, whereby a market-based depreciation curve was applied to the assets’ original cost.

Analysis of Goodwill

Our impairment test of goodwill was performed at the reporting unit level and involved a two-step process. The first step involved comparing the fair value of each reporting unit with the carrying amount of its assets and liabilities, including goodwill, as goodwill was specifically assigned to each of the reporting units upon our adoption of fresh start accounting in 2010. The fair value was determined by valuing the Company’s debt securities at trading value and by using a market based approach for the Company’s publicly traded common stock, which included a trailing 20-day average of the closing market price of our common stock ending May 31, 2011. The aggregate debt and equity values were used to arrive at a consolidated Business Enterprise Value (“BEV”) for the Company. Since our reporting units’ equity securities are not publicly traded, there is no observable market information for these securities. As such, for our impairment test as of May 31, 2011 we calculated a BEV for each of our reporting units using unobservable inputs (Level 3 in the fair value hierarchy) based on a discounted cash flow (“DCF”) valuation technique. The Company ensured that the sum of the individual reporting units’ BEVs was consistent with the Company’s consolidated BEV using observable market pricing.

Fair value of our reporting units was determined using a DCF analysis, which is a forward-looking valuation methodology that relates the value of an asset or business to the present value of expected future cash flows to be generated by that asset or business. Under this methodology, projected future cash flows are discounted by the business’ weighted average cost of capital (“WACC”). The WACC reflects the estimated blended rate of return that debt and equity investors would require to invest in the business based on its capital structure. The DCF calculation was based on management’s financial projections of un-levered after-tax free cash flows for the period 2011 to 2014. Long-term financial projections used in the valuation were based on specific operating and financial metrics that include, but are not limited to, customer count trends and behaviors, average spend per customer, product usage, and sales representative productivity. The forecasting process also included a review of Company, industry and macroeconomic factors including, but not limited to, achievement of future financial results, anticipated changes in general market conditions including variations in market regions, and known new business opportunities and challenges. Detailed research and forecast materials from leading industry and economic analysts were also used to form our assumptions and to provide context for the long-term financial projections. The forecasting process further included sensitivity analyses related to key Company, industry and macroeconomic variables. To capture our reporting units’ residual value beyond 2014, we used a widely accepted dividend growth model which factors in assumptions as to long term cash flow growth and the WACC. We also estimated the value of each reporting units’ beneficial tax attributes, which represent the tax amortization and net operating losses likely to be reflected in a hypothetical exit price for a reporting unit. The fair value of these tax attributes was calculated by measuring the present value of the tax savings expected to be provided relative to the taxes the Company would otherwise pay absent the availability of such attributes. These cash flows were then discounted using the determined WACC. Furthermore, the Company took into account a variety of qualitative factors in estimating the value of the tax attributes, including such factors as implementation and utilization risk.

The Company used a WACC of 13.5% for its various DCF analyses noted above as of May 31, 2011. The WACC was determined based primarily on the Company’s actual market cost of debt and equity as well as our current capital structure. The cost of equity was measured using the widely accepted capital asset pricing model. Various key Company specific inputs used in the WACC computation were also validated by comparison to those observed within a group of publicly traded market participants.

As a result of our impairment test of goodwill, we determined that each of our reporting unit’s fair value was less than the carrying amount of its assets and liabilities, requiring us to proceed with the second step of the goodwill impairment test. In the second step of the testing process, the impairment loss was determined by comparing the implied fair value of each reporting unit’s goodwill to the recorded amount of goodwill as of May 31, 2011. Determining the implied fair value of a reporting unit requires judgment and the use of significant estimates and assumptions noted above. We believe that the estimates and assumptions used in our impairment assessments are reasonable and based on available market information, but variations in any of the assumptions could result in materially different calculations of fair value and determinations of whether or not an impairment is indicated or the amount of impairment recorded. Based upon this analysis, we determined that the remaining goodwill assigned to each of our reporting units was fully impaired and thus recognized an aggregate goodwill impairment charge of $801.1 million during the three and six months ended June 30, 2011. The goodwill impairment charge has been recorded at each of our reporting units as follows:

	Three and Six Months Ended
Reporting Unit	June 30, 2011
RHDI	$	250,518
DME Inc.		236,159
DMW Inc.		314,397
Total	$	801,074

The goodwill impairment charge had no impact on current or future operating cash flow or compliance with debt covenants.

The following table presents critical assumptions used in the valuation of the reporting units at May 31, 2011:

											Percentage By Which
							Years of Cash Flow		Reporting Unit		Reporting Unit Fair
				Terminal Growth			Before Terminal		Fair Value at May		Value Exceeds its
Reporting Unit	Discount Rate			Rate (1)			Value		31, 2011		Carrying Value
RHDI		13.5	%		(1.0	)%	4.5 years		$	855,000		0.0	%
DME Inc.		13.5	%		(1.0	)%	4.5 years			700,000		0.0	%
DMW Inc.		13.5	%		(1.0	)%	4.5 years			720,000		0.0	%
Total		—			—			—	$	2,275,000		—

⁽¹⁾ Terminal growth rate is determined by reconciling the market value of our debt and equity securities as of May 31, 2011 to the Company’s long-term financial projections.

As of June 30, 2011, the Company has no recorded goodwill at any of its reporting units. The change in the carrying amount of goodwill since it was established in fresh start accounting as of February 1, 2010 (“Fresh Start Reporting Date”) is as follows:

Balance at February 1, 2010			$	2,097,124
Goodwill impairment charges during 2010	(1,137,623	)
Reduction in goodwill during 2010	(158,427	)
Total adjustment to goodwill during 2010				(1,296,050	)
Goodwill impairment charge during the three and six months ended June 30, 2011				(801,074	)
Balance at June 30, 2011			$	—

During the three months ended June 30, 2010, the Company concluded that there were indicators of impairment and as a result, we performed impairment tests of our goodwill, definite-lived intangible assets and other long-lived assets as of June 30, 2010. The testing results of our definite-lived intangible assets and other long-lived assets resulted in a non-goodwill intangible asset impairment charge of $17.3 million during the three and five months ended June 30, 2010 associated with trade names and trademarks, technology, local customer relationships and other from our former Business.com reporting unit. The Company also recognized a goodwill impairment charge of $752.3 million during the three and five months ended June 30, 2010 resulting from our impairment testing, which was recorded in each of our reporting units. The sum of the goodwill and non-goodwill intangible asset impairment charges totaled $769.7 million for the three and five months ended June 30, 2010. Please refer to our Quarterly Report on Form 10-Q for the period ended June 30, 2010 for additional information including estimates and assumptions used in our impairment testing.

In addition to the goodwill impairment charge recognized during the three and five months ended June 30, 2010 noted above, the Company also recognized a goodwill impairment charge of $385.3 million during the third quarter of 2010 for a total goodwill impairment charge of $1,137.6 million during the year ended December 31, 2010. During the fourth quarter of 2010, the Company recognized a reduction in goodwill of $158.4 million related to the finalization of cancellation of indebtedness income and tax attribute reduction calculations required to be performed at December 31, 2010 associated with fresh start accounting.

Other Information

Our identifiable intangible assets and their respective book values at June 30, 2011 are shown in the following table:

													Technology,
	Directory			Local			National			Trade			Advertising
	Services			Customer			Customer			Names and			Commitments
	Agreements			Relationships			Relationships			Trademarks			& Other			Total
Net intangible assets carrying value	$	1,330,000		$	560,000		$	175,000		$	380,000		$	85,500		$	2,530,500
Accumulated amortization		(118,108	)		(73,432	)		(12,110	)		(30,333	)		(11,018	)		(245,001	)
Net intangible assets at June 30, 2011	$	1,211,892		$	486,568		$	162,890		$	349,667		$	74,482		$	2,285,499

Amortization expense related to the Company’s intangible assets was $45.5 million and $83.7 million for the three and six months ended June 30, 2011, respectively, and $46.3 million and $77.1 million for the three and five months ended June 30, 2010, respectively. Amortization expense related to the Predecessor Company’s intangible assets was $15.6 million for the one month ended January 31, 2010.

The Company evaluates the remaining useful lives of identifiable intangible assets and other long-lived assets whenever events or circumstances indicate that a revision to the remaining period of amortization is warranted. If the estimated remaining useful lives change, the remaining carrying amount of the intangible assets and other long-lived assets would be amortized prospectively over that revised remaining useful life. In conjunction with our impairment testing as of May 31, 2011, the Company evaluated the remaining useful lives of identifiable intangible assets and other long-lived assets by considering, among other things, the effects of obsolescence, demand, competition, which takes into consideration the price premium benefit we have over competing independent publishers in our markets as a result of directory services agreements acquired in prior acquisitions, and other economic factors, including the stability of the industry in which we operate, known technological advances, legislative actions that result in an uncertain or changing regulatory environment, and expected changes in distribution channels. Based on this evaluation, the Company has determined that the estimated useful lives of intangible assets presented below reflect the period they are expected to contribute to future cash flows and therefore continue to be deemed appropriate. However, revisions to our long-term forecast, which was used for our impairment testing as of May 31, 2011, had a direct impact on the timing of amortization expense associated with intangible assets that are amortized using the income forecast method. The Company anticipates an increase in amortization expense of $34.3 million and total amortization expense of $187.1 million for 2011 resulting from these changes.

The combined weighted average useful life of our identifiable intangible assets at June 30, 2011 is 21 years. The weighted average useful lives and amortization methodology for each of our identifiable intangible assets at June 30, 2011 are shown in the following table:

	Weighted Average	Amortization
Intangible Asset	Useful Lives	Methodology
Directory services agreements	26 years	Income forecast method (1)
Local customer relationships	14 years	Income forecast method (1)
National customer relationships	25 years	Income forecast method (1)
Trade names and trademarks	14 years	Straight-line method
Technology, advertising commitments and other	8 years	Income forecast method (1)

⁽¹⁾ These identifiable intangible assets are being amortized under the income forecast method, which assumes the value derived from these intangible assets is greater in the earlier years and steadily declines over time.

If industry and local business conditions in our markets deteriorate in excess of current estimates, potentially resulting in further declines in advertising sales and operating results, and / or if the trading value of our debt and equity securities continue to decline significantly, we will be required to assess once again the recoverability and useful lives of our intangible assets and other long-lived assets. These factors, including changes to assumptions used in our impairment analysis as a result of these factors, could result in future impairment charges, a reduction of remaining useful lives associated with our intangible assets and other long-lived assets and acceleration of amortization expense.

Interest Expense

Successor Company

In conjunction with our adoption of fresh start accounting and reporting on the Fresh Start Reporting Date, an adjustment was established to record our outstanding debt at fair value on the Fresh Start Reporting Date. This fair value adjustment will be amortized as an increase to interest expense over the remaining term of the respective debt agreements using the effective interest method and does not impact future scheduled interest or principal payments. Amortization of the fair value adjustment included as an increase to interest expense was $7.5 million and $14.8 million for the three and six months ended June 30, 2011, respectively, and $8.3 million and $13.9 million for the three and five months ended June 30, 2010, respectively.

During the first quarter of 2010, we entered into interest rate swap and interest rate cap agreements that are not designated as cash flow hedges. The Company’s interest expense includes expense of $0.4 million and income of $0.3 million for the three and six months ended June 30, 2011, respectively, and expense of $5.6 million and $6.7 million for the three and five months ended June 30, 2010, respectively, resulting from the change in fair value of these interest rate swaps and interest rate caps.

Predecessor Company

Contractual interest expense that would have appeared on the Predecessor Company’s condensed consolidated statement of operations if not for the filing of the Chapter 11 petitions was $65.9 million for the one month ended January 31, 2010.

Advertising Expense

We recognize advertising expenses as incurred. These expenses include media, public relations, promotional, branding and sponsorship costs and on-line advertising. Total advertising expense for the Company was $6.7 million and $9.8 million for the three and six months ended June 30, 2011, respectively, and $6.8 million and $11.0 million for the three and five months ended June 30, 2010, respectively. Total advertising expense for the Predecessor Company was $1.0 million for the one month ended January 31, 2010.

Concentration of Credit Risk

Trade Receivables

Approximately 85% of our advertising revenues are derived from the sale of our marketing solutions to local businesses. Most new clients and clients desiring to expand their advertising programs are subject to a credit review. If the clients qualify, we may extend credit to them in the form of a trade receivable for their advertising purchase. We do not require collateral from our clients, although we do charge late fees to clients that do not pay by specified due dates. The remaining approximately 15% of our advertising revenues are derived from the sale of our marketing solutions to national or large regional chains. Substantially all of the revenues derived through national accounts are serviced through certified marketing representatives (“CMRs”) from which we accept orders. We receive payment for the value of advertising placed in our directories, net of the CMR’s commission, directly from the CMR. While we are still exposed to credit risk associated with trade receivables, the amount of credit losses from these accounts has historically been less than our credit losses on local accounts because the clients, and in some cases the CMRs, tend to be larger companies with greater financial resources than local clients. However, since the fourth quarter of 2010, our bad debt provision has been negatively impacted by delinquent balances associated with a CMR.

Derivative Financial Instruments

At June 30, 2011, we had interest rate swap and interest rate cap agreements with major financial institutions with a notional amount of $500.0 million and $400.0 million, respectively. We are exposed to credit risk in the event that one or more of the counterparties to the agreements does not, or cannot, meet their obligation. The notional amount for interest rate swaps is used to measure interest to be paid or received and does not represent the amount of exposure to credit loss. Any loss would be limited to the amount that would have been received over the remaining life of the interest rate swap agreement. Under the terms of the interest rate cap agreements, the Company will receive payments based on the spread in rates if the three-month LIBOR rate increases above the negotiated cap rates. Any loss would be limited to the amount that would have been received based on the spread in rates over the remaining life of the interest rate cap agreement. The counterparties to the interest rate swap and interest rate cap agreements are major financial institutions with credit ratings of AA- or higher, or the equivalent dependent upon the credit rating agency.

Earnings (Loss) Per Share

The calculation of basic and diluted earnings (loss) per share (“EPS”) is presented below.

	Successor Company												Predecessor Company
	Three Months			Six Months			Three Months			Five Months			One Month
	Ended			Ended			Ended			Ended			Ended
	June 30, 2011			June 30, 2011			June 30, 2010			June 30, 2010			January 31, 2010
Basic EPS
Net income (loss)	$	(602,107	)	$	(546,698	)	$	(769,923	)	$	(512,705	)	$	6,920,009
Weighted average common shares outstanding		50,123			50,082			50,016			50,013			69,013
Basic EPS	$	(12.01	)	$	(10.92	)	$	(15.39	)	$	(10.25	)	$	100.3
Diluted EPS
Net income (loss)	$	(602,107	)	$	(546,698	)	$	(769,923	)	$	(512,705	)	$	6,920,009
Weighted average common shares outstanding		50,123			50,082			50,016			50,013			69,013
Dilutive effect of stock awards		—			—			—			—			39
Weighted average diluted shares outstanding		50,123			50,082			50,016			50,013			69,052
Diluted EPS	$	(12.01	)	$	(10.92	)	$	(15.39	)	$	(10.25	)	$	100.2

Due to the Company’s reported net loss for the three and six months ended June 30, 2011 and three and five months ended June 30, 2010, the effect of all stock-based awards was anti-dilutive and therefore not included in the calculation of diluted EPS. For both the three and six months ended June 30, 2011, 3.4 million shares of the Company’s stock-based awards had exercise prices that exceeded the average market price of the Company’s common stock for the period. For both the three and five months ended June 30, 2010, 1.0 million shares of the Company’s stock-based awards had exercise prices that exceeded the average market price of the Company’s common stock for the period. For the one month ended January 31, 2010, 4.6 million shares of the Predecessor Company’s stock-based awards had exercise prices that exceeded the average market price of the Predecessor Company’s common stock for the period.

Fair Value of Financial Instruments

At June 30, 2011 and December 31, 2010, the fair value of cash and cash equivalents, accounts receivable, net and accounts payable and accrued liabilities approximated their carrying value based on the net short-term nature of these instruments. The Company has utilized quoted market prices, where available, to compute the fair market value of our long-term debt at June 30, 2011 as disclosed in Note 5, “Long-Term Debt.” These estimates of fair value may be affected by assumptions made and, accordingly, are not necessarily indicative of the amounts the Company could realize in a current market exchange.

As required by FASB ASC 820, Fair Value Measurements and Disclosures, assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The Company had interest rate swaps with a notional amount of $500.0 million and interest rate caps with a notional amount of $400.0 million at June 30, 2011 and December 31, 2010 that are measured at fair value on a recurring basis. The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2011 and December 31, 2010, respectively, and the level within the fair value hierarchy in which the fair value measurements were included.

	Fair Value Measurements
	Using Significant Other Observable Inputs (Level 2)
Derivatives:	June 30, 2011			December 31, 2010
Interest Rate Swap — Liabilities	$	(5,840	)	$	(6,365	)
Interest Rate Cap — Assets	$	44		$	308

There were no transfers of assets or liabilities into or out of Level 2 as of June 30, 2011 or December 31, 2010. The Company has established a policy of recognizing transfers between levels in the fair value hierarchy as of the end of a reporting period.

Valuation Techniques — Interest Rate Swaps and Interest Rate Caps

Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date.

Fair value for our derivative instruments was derived using pricing models based on a market approach. Pricing models take into account relevant observable market inputs that market participants would use in pricing the asset or liability. The pricing models used to determine fair value for each of our derivative instruments incorporate specific contract terms for valuation inputs, including effective dates, maturity dates, interest rate swap pay rates, interest rate cap rates and notional amounts, as disclosed and presented in Note 6, “Derivative Financial Instruments,” interest rate yield curves, and the creditworthiness of the counterparty and the Company. Counterparty credit risk and the Company’s credit risk could have a material impact on the fair value of our derivative instruments, our results of operations or financial condition in a particular reporting period. At June 30, 2011, the impact of applying counterparty credit risk in determining the fair value of our derivative instruments was an increase to our derivative instruments liability of less than $0.1 million. At June 30, 2011, the impact of applying the Company’s credit risk in determining the fair value of our derivative instruments was a decrease to our derivative instruments liability of $1.2 million. Many pricing models do not entail material subjectivity because the methodologies employed do not necessitate significant judgment, and the pricing inputs are observed from actively quoted markets, as is the case for our derivative instruments. The pricing models used by the Company are widely accepted by the financial services industry. As such and as noted above, our derivative instruments are categorized within Level 2 of the fair value hierarchy.

Fair Value Control Processes— Interest Rate Swaps and Interest Rate Caps

The Company employs control processes to validate the fair value of its derivative instruments derived from the pricing models. These control processes are designed to assure that the values used for financial reporting are based on observable inputs wherever possible. In the event that observable inputs are not available, the control processes are designed to assure that the valuation approach utilized is appropriate and consistently applied and that the assumptions are reasonable.

Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and certain expenses and the disclosure of contingent assets and liabilities. Actual results could differ materially from those estimates and assumptions. Estimates and assumptions are used in the determination of recoverability of long-lived assets, sales allowances, allowances for doubtful accounts, depreciation and amortization, employee benefit plans expense, restructuring expense and accruals, deferred income taxes, certain assumptions pertaining to our stock-based awards, and certain estimates and assumptions used in our impairment evaluation of goodwill, definite-lived intangible assets and other long-lived assets, among others.

New Accounting Pronouncements

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU 2011-05”). ASU 2011-05 allows an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity. ASU 2011-05 does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU 2011-05 should be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. As the adoption of ASU 2011-05 will only affect the reporting of information noted above, there will be no impact on our financial position and result of operations. The Company is currently evaluating the presentation alternatives noted in ASU 2011-05.

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04’). ASU 2011-04 was issued to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 clarifies the FASB’s intent about the application of existing fair value measurement and disclosure requirements, changes certain fair value measurement principles and enhances fair value disclosure requirements. ASU 2011-04 is effective for interim and annual reporting periods beginning after December 15, 2011 and will be applied prospectively. The Company does not expect the adoption of ASU 2011-04 to have an impact on our financial position and results of operations.

We have reviewed other accounting pronouncements that were issued as of June 30, 2011, which the Company has not yet adopted, and do not believe that these pronouncements will have a material impact on our financial position or operating results.

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Other Information

6 Months Ended

Jun. 30, 2011

Other Information [Abstract]

Other Information

11. Other Information

On February 14, 2011, we completed the sale of substantially all net assets of Business.com, including long-lived assets, domain names, trademarks, brands, intellectual property, related content and technology platform. As a result, we recognized a gain on the sale of these assets of $13.4 million during the six months ended June 30, 2011.

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Current Assets
Cash and cash equivalents	$ 169,644	$ 127,852
Accounts receivable:
Billed	199,156	186,477
Unbilled	545,506	567,839
Allowance for doubtful accounts	(84,367)	(75,891)
Net accounts receivable	660,295	678,425
Deferred directory costs	140,922	147,025
Deferred income taxes, net	47,836	84,149
Prepaid expenses and other current assets	57,790	82,656
Total current assets	1,076,487	1,120,107
Fixed assets and computer software, net	171,120	188,749
Other non-current assets	11,416	9,762
Intangible assets, net	2,285,499	2,369,156
Goodwill, net	0	801,074
Total Assets	3,544,522	4,488,848
Current Liabilities
Accounts payable and accrued liabilities	142,234	154,540
Accrued interest	27,715	30,905
Deferred directory revenues	691,436	722,566
Current portion of long-term debt	298,907	249,301
Total current liabilities	1,160,292	1,157,312
Long-term debt	2,298,084	2,487,920
Deferred income taxes, net	42,424	205,812
Other non-current liabilities	61,732	111,888
Total liabilities	3,562,532	3,962,932
Commitments and contingencies
Shareholders' (Deficit) Equity
Common stock, par value $.001 per share, authorized - 300,000,000 shares; issued and outstanding - 50,158,556 shares at June 30, 2011 and 50,031,441 shares at December 31, 2010	50	50
Additional paid-in capital	1,457,824	1,455,223
Accumulated deficit	(1,470,290)	(923,592)
Accumulated other comprehensive loss	(5,594)	(5,765)
Total shareholders' (deficit) equity	(18,010)	525,916
Total Liabilities and Shareholders' (Deficit) Equity	$ 3,544,522	$ 4,488,848