infoUSA Reports Record Third Quarter Results

The following table presents the financial results and selected balance sheet items for infoUSA® (Nasdaq:IUSA) for the third quarter and first nine months of fiscal year 2007 ending on September 30, 2007:                   (Amounts in thousands, except per share amounts)   3rd Quarter2006   3rd Quarter2007   Year-to-Date2006   Year-to-Date2007 Net sales   $ 106,384   $184,972(a)   $ 309,760   $502,929(a) Cost of goods and services 26,519 71,553 78,717 198,733 Selling, general and administrative 54,050 71,357 166,450 212,952 Depreciation (1) 3,540 5,696 10,072 15,613 Amortization of intangible assets     2,307       4,957       11,539       13,354   Operating income 19,968 31,409(a) 42,982 62,277(a) Other expense (2) (2,570 ) (4,670 ) (8,149 ) (15,183 ) Income before taxes 17,398 26,739 34,833 47,094 Income taxes 6,250 9,708 12,546 17,386 Net income 11,148 17,031 22,287 29,708 Earnings per share $ 0.20 $ 0.31 $ 0.41 $ 0.53 Weighted average shares outstanding     55,331       55,837       54,822       55,605                     Total debt $ 136,820 $ 301,185 $ 136,820 $ 301,185 Capital expenditures 5,567 4,466 14,987 17,355 EBITDA     26,132       42,983       64,765       91,868   (1) Depreciation of tangible assets and amortization of capitalized software. (2) Investment income and interest expense. (a) Includes one-time revenue of $9.9 million, and operating income of $9.2 million for lawsuit settlement. RESULTS OF OPERATIONS Vin Gupta, Founder, Chairman and Chief Executive Officer of infoUSA, stated, "The third quarter of 2007 was a record quarter for infoUSA. We experienced growth in our core businesses, realized the impact of our successful integration of Opinion Research®, and completed two additional acquisitions in the market research industry. We continue to focus on our strategy of becoming a one-stop, fully integrated provider of marketing and sales information and services to corporations and small businesses and a leading provider of database and research services to the non-profit, political and public sectors.” infoUSA significantly expanded the scope of its Marketing Research Group during the quarter. In addition to the integration of Opinion Research in late 2006, infoUSA also acquired Guideline, Inc.; NWC Research, an Australian company, which extended infoUSA’s reach in the Asia-Pacific market; and announced the acquisition of Northwest Research Group, located in Boise, Idaho. The acquisition of Northwest Research Group will provide infoUSA with access to the market research industry in the western United States. Additionally, Northwest Research Group will allow infoUSA to enter the transportation marketing arena and augment the Company’s customer satisfaction expertise by providing additional senior level support. infoUSA also announced the acquisition of SECO Financial during the quarter. SECO Financial will join infoUSA’s Data Group as a leader in financial services industry marketing. Both the SECO Financial and Northwest Research Group acquisitions were effective October 1, 2007. "Our success with Opinion Research and our additional acquisitions during the quarter validates our belief that clients see the value in market research services that include customer, product, and employee surveys to the corporate and public sector,” Mr. Gupta said. "With a strong foundation of market research capabilities now in place, we plan to continue consolidating this fragmented industry. We will remain focused on growing the Company through strategic acquisitions in both the marketing research sector and elsewhere.” infoUSA offers 12 proprietary databases that allow its customers to find new prospects and increase sales. The Company’s services include providing sales leads, mailing lists, database marketing, direct marketing, e-mail marketing, customer surveys and unlimited online access to data and services. Together, infoUSA’s businesses provide a single, fully integrated solution serving the broad spectrum of its clients’ marketing needs. FINANCIAL HIGHLIGHTS During the third quarter of 2007, infoUSA delivered record revenues of $185.0 million, which includes $56.3 million for the Marketing Research Group. Excluding the Marketing Research Group, the Company’s revenue was $128.7 million for the third quarter of 2007, compared to $106.4 million for the same period in 2006, an increase of 21%. Revenue for the third quarter included $9.9 million received from the final settlement in a lawsuit, which was originally commenced in December 2001, against Naviant, Inc. (now known as BERJ, LLP) in the District Court for Douglas County, Nebraska for breach of a database license agreement. On July 12, 2007, the District Court entered an Amended Order of Judgment in the Company's favor in the amount of $9.75 million, plus interest (the "Order"). On August 10, 2007, the Company and Naviant agreed not to pursue further appeals of the Order and agreed to settle this matter for approximately $11.2 million, less attorney fees and costs. On August 16, 2007, pursuant to that agreement, the court distributed approximately $9.9 million in net proceeds to the Company. infoUSA’s third quarter operating income was $31.4 million, which includes $9.2 million from the Naviant settlement, net of related expenses, compared to $20.0 million in the third quarter of 2006. infoUSA’s earnings per share for the third quarter of 2007 were $0.31 versus $0.20 in the third quarter of 2006. EBITDA for the third quarter was $43.0 million, which includes $9.2 million from the Naviant Settlement. The segment revenue for the third quarter was as follows: Revenue for the Data Group in the third quarter was $92.7 million, which includes $9.9 million for the Naviant settlement, compared to $73.4 million for the same period last year. Growth for the quarter for the Data Group was 26%. Excluding the Naviant settlement, growth for the quarter for the Data Group was 13%. Revenue for the Services Group in the third quarter was $36.0 million compared to $33.0 million for the same period last year. Growth for the quarter for the Services Group was 9%. Revenue for the Marketing Research Group in the third quarter was $56.3 million. The Marketing Research Group is composed of Opinion Research and Macro International, acquired December 4, 2006; Guideline acquired August 20, 2007; and NWC Research acquired July 27, 2007. The following are highlights of infoUSA’s accomplishments in the third quarter of 2007: Completed the acquisitions of NWC Research in Australia and Guideline, Inc., which have expanded our international presence and have given us even more product offerings such as on-demand secondary research, market and competitive intelligence. SalesGenie and subscription strategy are performing well. It’s our intent to invest in technology and marketing of this service. infoUSA announced that it will compile a business database of all businesses in the United Kingdom. The database will be sold to small and large customers in the form of customized list products, online access, subscription services, and license agreements to value added resellers. infoUSA continues to make strategic acquisitions with the announcement of the SECO Financial and Northwest Research Group acquisitions that were closed effective October 1, 2007. infoUSA will complete photographs of all businesses in the United States and Canada. Currently we have 2.5 million photographs, and we will be adding an additional 3 million. The high quality photos have been very well received in the market and are being used by almost all of the major search engines. infoUSA continues to capture more information from the websites of businesses, such as description, executive names, titles and hours of operation. NON-GAAP INFORMATION In addition to disclosing results determined in accordance with generally accepted accounting principles, or GAAP, infoUSA also discloses earnings before interest expense, income taxes and depreciation and amortization, or EBITDA, which is a non-GAAP measure. Management believes EBITDA provides useful supplemental information to management and investors because management uses this information internally for evaluating the aggregate performance of the Company’s operating businesses. In addition, EBITDA is commonly used as an analytical indicator within infoUSA’s industry and is a component of the Company’s financial covenant calculations under its credit facilities, subject to certain adjustments. All companies do not calculate EBITDA in the same manner and infoUSA’s presentation may not be comparable to those presented by other companies. EBITDA should not be viewed as a substitute for, or superior to, net income or other data prepared in accordance with GAAP as measures of infoUSA’s profitability or liquidity. See the tables in this press release for a reconciliation of EBITDA to net income. CONFERENCE CALL The Company will host its third quarter conference call on October 19, 2007 at 5:00 pm Eastern time. To access the conference call, please dial 866-700-5192 (international 617-213-8833), passcode 67305187, approximately 10 minutes prior to the start of the call. A replay of the call will be available from 7:00 pm Eastern time, October 19, 2007 through midnight Eastern Time, October 26, 2007. The replay number is 888-286-8010 (international 617-801-6888), passcode 99964632. A live webcast of the conference call will be available at the Company’s Investor Relations web site, http://ir.infousa.com. About infoUSA infoUSA (www.infoUSA.com), founded in 1972, is the leading provider of business and consumer databases for sales leads & mailing lists, database marketing services, data processing services and sales and marketing solutions. Content is the essential ingredient in every marketing program, and infoUSA has the most comprehensive data in the industry, and is the only company to own 12 proprietary databases under one roof. The infoUSA database powers the directory services of the top Internet traffic-generating sites. Nearly 4 million customers use infoUSA's products and services to find new customers, grow their sales, and for other direct marketing, telemarketing, customer analysis and credit reference purposes. infoUSA headquarters are located at 5711 S. 86th Circle, Omaha, NE 68127 and can be contacted at (402) 593-4500. To know more about Sales Leads, click www.infousa.com. To get a 72-hour free trial and 100 free sales leads, click www.salesgenie.com. Statements in this announcement other than historical data and information constitute forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those stated or implied by such forward-looking statements. The potential risks and uncertainties include, but are not limited to, recent changes in senior management, the successful integration of recent and future acquisitions, fluctuations in operating results, failure to successfully carry out our Internet strategy or to grow our Internet revenue, effects of leverage, changes in technology and increased competition. More information about potential factors that could affect the company's business and financial results is included in the company's filings with the Securities and Exchange Commission. infoUSA INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)     FOR THE QUARTER ENDED FOR THE NINEMONTHS ENDED   September30, 2006   September30, 2007 September30, 2006   September30, 2007 (unaudited) Net sales $ 106,384 $ 184,972 $ 309,760 $ 502,929 Costs and expenses: Cost of goods and services 26,519 71,553 78,717 198,733 Selling, general and administrative 54,050 71,357 166,450 212,952 Depreciation and amortization of operating assets 3,540 5,696 10,072 15,613 Amortization of intangible assets   2,307     4,957     11,539     13,354     86,416     153,563     266,778     440,652     Operating income 19,968 31,409 42,982 62,277   Other income (expense): Investment income 196 606 368 660 Other charges 121 315 (196 ) (36 ) Interest expense   (2,887 )   (5,591 )   (8,321 )   (15,807 )   Income before income taxes 17,398 26,739 34,833 47,094 Income taxes   6,250     9,708     12,546     17,386     Net income $ 11,148   $ 17,031   $ 22,287   $ 29,708   BASIC & DILUTED EARNINGS PER SHARE: Basic earnings per share $ 0.20   $ 0.31   $ 0.41   $ 0.53   Diluted earnings per share $ 0.20   $ 0.30   $ 0.40   $ 0.53   Basic weighted average shares outstanding   55,331     55,837     54,822     55,605   Diluted weighted average shares outstanding   55,425     56,017     55,177     55,826   The following provides a reconciliation of net income to EBITDA: FOR THE QUARTERENDED FOR THE NINE MONTHSENDED   September30, 2006   September30, 2007   September30, 2006   September30, 2007 Net income $ 11,148 $ 17,031 $ 22,287 $ 29,708 Interest expense 2,887 5,591 8,321 15,807 Income taxes 6,250 9,708 12,546 17,386 Depreciation and amortization of operating assets 3,540 5,696 10,072 15,613 Amortization of intangible assets   2,307   4,957   11,539   13,354 EBITDA $ 26,132 $ 42,983 $ 64,765 $ 91,868 infoUSA INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands)         December 31, 2006   September 30, 2007 Assets         Cash and cash equivalents $ 4,433 $ 8,257 Marketable securities 2,665 1,958 Accounts receivable 76,628 65,109 Accounts receivable-list brokerage 68,437 65,009 Accounts receivable – unbilled services 20,794 28,357 Accounts receivable – other 0 1,791 Deferred income taxes 3,522 5,767 Prepaid expenses 7,268 11,820 Deferred marketing costs     3,485       2,269   Total current assets     187,232       190,337   Property and equipment, net 61,172 69,149 Intangible assets, net 489,795 530,677 Other assets   11,376       12,822       $ 749,575     $ 802,985   Liabilities         Current portion of long-term debt 4,627 5,288 Accounts payable 27,474 30,851 Accounts payable-list brokerage 62,028 54,612 Accrued payroll expenses 33,608 36,549 Accrued expenses 12,149 18,584 Income taxes payable 4,655 8,272 Deferred revenue     77,944       65,775   Total current liabilities     222,485       219,931   Long-term debt, net of current portion 255,263 295,897 Deferred income taxes 35,421 30,418 Other liabilities     2,248       7,967   Stockholders’ equity         Common stock 138 140 Paid-in capital 126,943 134,949 Retained earnings 108,391 118,677 Receivable from officer 0 (5,053 ) Accumulated other comprehensive income (loss)   (1,314 )     59   Total stockholders’ equity   234,158       248,772       $ 749,575     $ 802,985