Additional Financial Information

Consolidated Statements of Comprehensive Income (Loss)

Depreciation and amortization

The following tables set forth the components of the Company's depreciation and amortization expense for the three and six months ended June 30, 2013, and 2012.



	Three Months Ended June 30				Six Months Ended June 30
	2013		2012		2013		2012
	(in millions)
Amortization of intangible assets	$	176	$	87	$	251	$	175
Amortization of capitalized software	11		14		22		26
Depreciation of fixed assets	6		4		9		8
Total depreciation and amortization	$	193	$	105	$	282	$	209

Severance

During the three and six months ended June 30, 2013, the Company recorded severance expense of $19 million which was included as part of merger integration costs. During the three and six months ended June 30, 2012, the Company recorded severance expense of $2 million and $4 million, respectively. Severance costs are recorded as part of general and administrative expense on the Company's consolidated statements of comprehensive income (loss).

Interest expense, net

The Company recorded interest expense, net of $79 million and $122 million for the three and six months ended June 30, 2013 compared to $48 million and $105 million for the three and six months ended June 30, 2012, respectively. Interest expense, net consists primarily of interest expense associated with our debt obligations, non-cash interest expense associated with the amortization of debt discount, non-cash interest expense associated with payment-in-kind interest related to our senior subordinated notes, and non-cash interest expense associated with the amortization of deferred financing cost, offset by interest income. Non-cash interest expense was $15 million and $24 million for the three and six months ended June 30, 2013 compared to $10 million and $23 million for the three and six months ended June 30, 2012, respectively. As a result of our merger with SuperMedia effective April 30, 2013, the May 1, 2013 through June 30, 2013 interest expense, net of SuperMedia of $38 million (including $11 million of non-cash interest expense related to the amortization of debt discount) has been included in our interest expense, net for the three and six months ended June 30, 2013.

Other Comprehensive Income (Loss)

The following tables set forth the components of the Company's comprehensive income (loss) adjustments for pension and other post-employment benefits for the three and six months ended June 30, 2013, and 2012.



	Three Months Ended June 30
	2013								2012
	Gross			Taxes		Net			Gross			Taxes			Net
	(in millions)
Net income (loss)						$	(68	)							$	53
Adjustments for pension and other post-employment benefits:
Accumulated actuarial losses of benefit plans	$	(11	)	$	4	(7		)	$	(2	)	$	1		(1		)
Reclassifications included in net income (loss):
Amortization of actuarial losses	—			—		—			—			—			—
Settlement losses	—			—		—			2			(1		)	1
Total reclassifications included in net income (loss)	—			—		—			2			(1		)	1
Adjustments for pension and other post-employment benefits	$	(11	)	$	4	(7		)	$	—		$	—		—
Total comprehensive income (loss)						$	(75	)							$	53



	Six Months Ended June 30
	2013								2012
	Gross			Taxes		Net			Gross			Taxes			Net
	(in millions)
Net income (loss)						$	(127	)							$	111
Adjustments for pension and other post-employment benefits:
Accumulated actuarial losses of benefit plans	$	(11	)	$	4	(7		)	$	(2	)	$	1		(1		)
Reclassifications included in net income (loss):
Amortization of actuarial losses	1			—		1			—			—			—
Settlement losses	—			—		—			2			(1		)	1
Total reclassifications included in net income (loss)	1			—		1			2			(1		)	1
Adjustments for pension and other post-employment benefits	$	(10	)	$	4	(6		)	$	—		$	—		—
Total comprehensive income (loss)						$	(133	)							$	111

The following table sets forth the balance of the Company's accumulated other comprehensive (loss). All balances in accumulated other comprehensive (loss) are related to pension and other post-employment benefits.



	Gross			Taxes		Net
	(in millions)
Accumulated other comprehensive (loss) - December 31, 2012	$	(47	)	$	3	$	(44	)
Adjustments for pension and other post-employment benefits, net of amortization	(10		)	4		(6		)
Accumulated other comprehensive (loss) - June 30, 2013	$	(57	)	$	7	$	(50	)

Balance Sheet

Assets held for sale

The Company entered into an agreement to sell its land and building in Los Alamitos, CA, for $21 million, subject to due diligence by the purchaser. The sale is scheduled to close during 2013. As such, the Company has reflected these assets as assets held for sale on the Company's consolidated balance sheet as of June 30, 2013.

Accounts payable and accrued liabilities

The following table sets forth additional financial information related to the Company's consolidated financial statements at June 30, 2013 and December 31, 2012.



	At June 30, 2013		At December 31, 2012
	(in millions)
Accounts payable	$	19	$	14
Accrued salaries and wages	70		32
Accrued taxes	19		5
Accrued expenses	60		37
Customer refunds, advance payments and other	21		7
Total accounts payable and accrued liabilities	$	189	$	95

The 2013 amounts include accounts payable and accrued liabilities associated with the acquisition of SuperMedia. For additional information on the acquisition of SuperMedia, see Note 2.

Fair Value of Financial Instruments

The Company's financial assets or liabilities required to be measured at fair value on a recurring basis include cash and cash equivalents held in money market funds. The Company's money market funds of $81 million and $3 million as of June 30, 2013 and December 31, 2012, respectively, have been recorded at fair value using Level 2 inputs. The Company had $8 million and $2 million held in certificates of deposit (“CD's”) as June 30, 2013 and December 31, 2012, respectively, that serve as collateral against letters of credit held with our insurance carriers. These CD's are valued using Level 2 inputs. The fair value of the Company's money market funds and CD's classified as Level 2 are determined based on observable market data. The fair value of accounts receivable and accounts payable approximate their carrying amounts due to their short-term nature. The fair value of our senior secured credit facilities debt instruments are determined using Level 2 inputs based on the observable market data of a private exchange. The fair value of our senior subordinated notes are determined using Level 1 inputs.

The following table sets forth the carrying amount and fair value of the Company's total debt obligations at June 30, 2013 and at December 31, 2012.



	At June 30, 2013				At December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(in millions)
Senior secured credit facilities
SuperMedia Inc.	$	1,035	$	1,098	$	—	$	—
R.H. Donnelly Inc.	723		545		776		528
Dex Media East, Inc.	490		373		516		360
Dex Media West, Inc.	462		383		498		369
Senior subordinated notes	228		149		220		73
Total debt obligations	$	2,938	$	2,548	$	2,010	$	1,330

With the merger and the adoption of acquisition accounting, the SuperMedia senior secured credit facility was recorded at its fair value on April 30, 2013 of $1,082 million, from its face value of $1,442 million, resulting in a debt fair value adjustment of $360 million. For additional information on our outstanding debt obligations, see Note 8.