Dexyp 2017 Annual Report

DEX MEDIA HOLDINGS, INC. 2017 ANNUAL REPORT CONSOLIDATED FINANCIAL STATEMENTS

For

THE SUCCESSOR COMPANY FOR THE YEAR ENDED DECEMBER 31, 2017, AND THE FIVE MONTHS ENDED DECEMBER 31, 2016,

And

THE PREDECESSOR COMPANY FOR THE SEVEN MONTHS ENDED JULY 31, 2016, AND THE YEAR ENDED DECEMBER 31, 2015 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Management's Discussion and Analysis of Financial Condition and Results of Operations 3

Report of Independent Auditors 12

Financial Statements

Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2017 (Successor Company), the five months ended December 31, 2016 (Successor Company), the seven months ended July 31, 2016 (Predecessor Company), and the year ended December 31, 2015 (Predecessor Company) 13

Consolidated Balance Sheets at December 31, 2017 (Successor Company) and December 31, 2016 (Successor Company) 14

Consolidated Statements of Changes in Shareholders’ Equity (Deficit) for the year ended December 31, 2017 (Successor Company), the five months ended December 31, 2016 (Successor Company), the seven months ended July 31, 2016 (Predecessor Company), and the year ended December 31, 2015 (Predecessor Company) 15

Consolidated Statements of Cash Flows for the year ended December 31, 2017 (Successor Company), the five months ended December 31, 2016 (Successor Company), the seven months ended July 31, 2016 (Predecessor Company) and the year ended December 31, 2015 (Predecessor Company) 17

Notes to Consolidated Financial Statements 19

2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED)

The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity, and capital resources. This discussion and analysis should be read in conjunction with the accompanying consolidated financial statements.

Overview

Dex Media Holdings, Inc. (“DexYP,” the “Company,” the “Successor,” or the “Successor Company”) is a leading provider of local marketing solutions to approximately 600,000 business clients across the United States. The Company's approximately 2,800 sales employees work directly with clients to provide multiple local marketing solutions to help clients connect with their customers.

On June 30, 2017, the Company completed the acquisition of YP Holdings (“YP”), a leading marketing solutions and search platform provider and publisher of the Real Yellow Pages and YP.com. The Company acquired substantially all of the assets and assumed substantially all of the liabilities. From June 30, 2017 forward, the Company began doing business as DexYP and are led by the Company’s current board of directors and executive management team.

The Company's local marketing solutions are primarily sold under various “Dex” and “YP” brands, including print yellow page directories, online local search engine websites, mobile local search applications, and placement of client’s information and advertisements on major search engine websites with which the Company is affiliated. DexYP's local marketing solutions also include website development, search engine optimization, market analysis, video development and promotion, reputation management, social media marketing, and tracking/reporting of customer leads. The Company also offers an all-in-one small business management software as a service (SAAS) solution under the brand name Thryv. This system provides the day-to-day essential tools needed to compete in the modern marketplace. The software solution comes complete with a customer relationship management tool (CRM), customer communication tools, invoicing and estimation tools, payment processing, appointment scheduling, social profile management, email & text marketing, and online presence tools.

The Company’s print yellow page directories are co-branded with various local telephone service providers, including Verizon Communications Inc., AT&T Inc., CenturyLink, Inc., FairPoint Communications, Inc., and Frontier Communications Corporation. The Company operates as the authorized publisher of print yellow page directories in some of the markets where they provide telephone service and hold multiple agreements governing relationships with each company, including publishing agreements, branding agreements, and non-competition agreements.

In 2017, we published approximately 2,000 distinct directory titles in 48 states and distributed approximately 116 million directories to businesses and residences in the United States.

On May 16, 2016 (the “Petition Date”), Dex Media, Inc. (“Dex Media,” the “Predecessor,” or the “Predecessor Company,”) and certain of its affiliates, as debtors and debtors-in-possession (collectively, the “Debtors”) filed with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) a proposed joint voluntary prepackaged Chapter 11 plan of reorganization (the “Plan”) pursuant to sections 1125 and 1126(b) of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”).

On July 15, 2016, a Confirmation Hearing was held, at which time, the Plan was confirmed. On July 29, 2016 (the “Effective Date”), the Bankruptcy Court finalized the bankruptcy proceeding and the Company successfully emerged from bankruptcy.

Basis of Presentation

The Company prepares its financial statements in accordance with generally accepted accounting principles (“GAAP”) in the United States. The consolidated financial statements include the financial statements of Dex Media Holdings, Inc. and its wholly owned subsidiaries. The accompanying consolidated financial statements contain all adjustments, consisting of normal recurring items and accruals, necessary to fairly present the financial position, results of operations, and cash flows of the Successor Company and the Predecessor Company, respectively. All inter-company accounts and transactions have been eliminated. The Successor Company is managed as a single reporting unit.

3 Critical Accounting Policies and Use of Estimates

The preparation of the Company’s financial statements requires management to make estimates and judgments that affect the reported amount of assets and liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

Examples of reported amounts that rely on significant estimates include the allowance for doubtful accounts, assets acquired and liabilities assumed in business combinations, fresh start accounting, certain amounts related to the accounting for income taxes, the recoverability and fair value determination of fixed assets and capitalized software, goodwill, intangible assets and other long-lived assets, pension assumptions, and estimates of selling prices that are used for multiple-element arrangements. For a description of all of the Company’s material accounting policies, See Note 1, Description of Business and Summary of Significant Accounting Policies, to the Company’s accompanying consolidated financial statements.

Business Combinations

On June 30, 2017 (the “Acquisition Date”), the Company completed the acquisition of YP Holdings (“YP”), a leading marketing solutions and search platform provider and publisher of the Real Yellow Pages and YP.com. The Company acquired substantially all of the assets and assumed substantially all of the liabilities, in each case, other than certain specified assets and liabilities. The newly formed Company will do business as DexYP and will be led by the Company’s current board of directors and executive management team. We accounted for the business combination using the acquisition method of accounting in accordance with ASC 805, “Business Combinations.”

In connection with the Acquisition, consideration paid by the Company included $600.7 million in cash and 3,248,487 shares of the Company’s common stock, with a fair value of $18.2 million. The equity value of the shares issued was calculated using the income approach. Specifically, the discounted cash flow method was utilized to determine the equity value. Closing costs including finance and legal advisory fees, debt issuance costs, and insurance were $15.0 million.

To finance the Acquisition, the Company amended its Dex Media Credit Agreement to issue an additional $550.0 million under its term loan. In addition, the Company amended its line of credit increasing the available borrowings from $200.0 million to $350.0 million, using the acquired YP billed and unbilled accounts receivable as collateral. On June 30, 2017, the Company borrowed an additional $70.7 million under the line of credit to help finance the Acquisition. The Company incurred no debt issuance cost for the additional $550.0 million term loan and $3.9 million of debt issuance cost for the additional $150.0 million revolving line of credit. The debt issuance costs for the revolving line of credit were recorded as an asset and will be amortized ratably over the term of revolving credit agreement.

See Note 2, Acquisition of YP, to the Company's accompanying consolidated financial statements for further detail regarding our business combination.

Consolidated Results of Operations

The results of operations presented and discussed herein are presented on a non-GAAP proforma consolidated basis for DexYP as if the Acquisition had occurred on January 1, 2016. We believe that non-GAAP proforma results provide more meaningful information to management and investors relative to the underlying financial performance of the company. The unaudited proforma information is not necessarily indicative of the consolidated results of operations that would have been realized had the Acquisition been completed as of the beginning of 2016, nor is it meant to be indicative of future results of operations that the combined entity will experience. In addition, these non-GAAP financial measures are used internally by management for budgeting, forecasting and compensation.

The adjustments made to our GAAP results necessary to arrive at the non-GAAP proforma amounts presented below remove the impact of fresh start accounting entries required upon emergence from bankruptcy on July 29, 2016 as well as acquisition accounting entries affecting selling and cost of services associated with our acquisition of YP on June 30, 2017. In addition, non-recurring costs which include certain reorganization activities, business transformation, and non-cash expenses associated with long-term incentive compensation and pension expense, were removed from our non-GAAP adjusted pro forma results.

4 Results of Operations

These results adjust the GAAP results of operations as discussed above to reflect non-GAAP operating results for the year ended December 31, 2017:

Table 1 - 2017 Year Ended December 31, 2017 Successor Successor Company Company

GAAP Adjustments to GAAP Non-GAAP YP Results Six Months Year Ended Ended Proforma Proforma December 31, June 30, Adjustments Results (in thousands) 2017 2017 2017 2017

Operating Revenue $ 1,318,166 $ 686,285 $ 304,255 (1) $ 2,308,706

Operating Expenses Selling 364,588 210,120 1,542 (2) 576,250 Cost of service (exclusive of depreciation and amortization) 544,386 277,824 45,492 (3) 867,702 General and administrative 279,558 140,576 (121,660) (4) 298,474 Depreciation and amortization 301,435 36,560 — 337,995 Total Operating Expenses 1,489,967 665,080 (74,626) 2,080,421 Operating Income (Loss) (171,801) 21,205 378,881 228,285 Interest expense, net 67,815 41,707 — 109,522 (Loss) Income Before Reorganization Items and Fresh Start Adjustments, Gains on Early Extinguishment of Debt and Provision (Benefit) for Income Taxes (239,616) (20,502) 378,881 118,763 Reorganization items and fresh start adjustments, net — — — — Gains on early extinguishment of debt 751 — — 751 (Loss) Income Before Provision (Benefit) for Income Taxes $ (238,865) $ (20,502) $ 378,881 $ 119,514

(1) Represent the following two components: recognition of deferred revenue amortization associated with Dex Media deferred revenue balances written off in fresh start accounting; recognition of deferred revenue amortization associated with YP related deferred revenue balances written off in purchase accounting.

(2) Represent the following two components: recognition of deferred sales commissions associated with Dex Media deferred sales commission balances written off in fresh start accounting; offset by accounting conformity adjustments associated with YP's accounting for deferred sales commissions.

(3) Represent the following two components: recognition of deferred directory costs associated with Dex Media deferred directory cost balances written off in fresh start accounting; recognition of deferred directory associated with YP related deferred directory cost balances written off in purchase accounting.

(4) Represents the removal of certain non-recurring costs, including certain reorganization activities, business transformation costs, pension expense and long-term incentive compensation.

5 These results adjust the GAAP results of operations to reflect non-GAAP operating results for the Successor Company, the Predecessor Company, and the combined year ended December 31, 2016 (“Combined 2016 Company”): Table 2 - 2016 Year Ended December 31, 2016 Combined Predecessor Successor 2016 Company Company Company

GAAP GAAP Adjustments to GAAP Non-GAAP

Five YP Results Seven Months Year Months Ended Ended Ended December December Proforma Proforma July 31, 31, 31, Adjustments Results (in thousands) 2016 2016 2016 2016 2016

Operating Revenue $ 712,628 $ 230,341 $ 1,610,398 $ 247,891 (1) $ 2,801,258

Operating Expenses Selling 176,564 84,353 484,266 27,934 (2) 773,117 Cost of service (exclusive of depreciation and amortization) 267,107 134,228 597,914 33,666 (3) 1,032,915 General and administrative 89,646 52,729 265,560 (112,897) (4) 295,038 Depreciation and amortization 150,454 128,947 91,272 — 370,673 Impairment charge — 712,795 — — 712,795 Total Operating Expenses 683,771 1,113,052 1,439,012 (51,297) 3,184,538 Operating Income (Loss) 28,857 (882,711) 171,386 299,188 (383,280) Interest expense, net 134,753 27,584 58,459 — 220,796 (Loss) Income Before Reorganization Items and Fresh Start Adjustments, Gains on Early Extinguishment of Debt and Provision (Benefit) for Income Taxes (105,896) (910,295) 112,927 299,188 (604,076) Reorganization items and fresh start adjustments, net 1,843,991 — — (1,843,991) — Gains on early extinguishment of debt — 1,056 — — 1,056 Income (Loss) Before Provision (Benefit) for Income Taxes $ 1,738,095 $ (909,239) $ 112,927 $ (1,544,803) $ (603,020)

(1) Represents the recognition of deferred revenue amortization associated with Dex Media deferred revenue balances written off in fresh start accounting.

(2) Represents the recognition of deferred sales commissions associated with Dex Media deferred sales commission balances written off in fresh start accounting.

(3) Represents the recognition of deferred directory costs associated with Dex Media deferred directory cost balances written off in fresh start accounting.

(4) Represents the removal of certain non-recurring costs, including capital restructuring costs, business transformation, pension expense and stock warrants expense.

6 The following table sets forth the operating results for the year ended December 31, 2017 and the Combined 2016 Company on a consolidated non-GAAP proforma basis:

Non-GAAP Proforma Results Table 1 - 2017 Table 2 - 2016 Successor Combined 2016 Company Company Year Ended Year Ended December 31, December 31, $ % (in thousands) 2017 2016 Change Change

Operating Revenue $ 2,308,706 $ 2,801,258 $ (492,552) (17.6)%

Operating Expenses Selling 576,250 773,117 (196,867) (25.5)% Cost of service (exclusive of depreciation and amortization) 867,702 1,032,915 (165,213) (16.0)% General and administrative 298,474 295,038 3,436 1.2 % Depreciation and amortization 337,995 370,673 (32,678) (8.8)% Impairment charge — 712,795 (712,795) (100.0)% Total Operating Expenses 2,080,421 3,184,538 (1,104,117) (34.7)% Operating Income (Loss) 228,285 (383,280) 611,565 (159.6)% Interest expense, net 109,522 220,796 (111,274) (50.4)% Income (Loss) Before Reorganization Items and Fresh Start Adjustments, Gains on Early Extinguishment of Debt and Provision (Benefit) for Income Taxes 118,763 (604,076) 722,839 (119.7)% Reorganization items and fresh start adjustments, net — — — — Gains on early extinguishment of debt 751 1,056 (305) (28.9)% Income ( Loss) Before Provision (Benefit) for Income Taxes $ 119,514 $ (603,020) $ 722,534 (119.8)%

Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

Operating Revenue

Operating revenue of $2,308.7 million for the year ended December 31, 2017 decreased $492.6 million, or 17.6%, compared to operating revenue of $2,801.3 million for the Combined 2016 Company. This decline in operating revenue was due to reduced advertiser spending, reflecting continued competition from other advertising media (including the Internet, cable television, newspaper and radio).

Operating Expense

Operating expense of $2,080.4 million for the year ended December 31, 2017 decreased $1,104.2 million, or 34.7%, compared to operating expense of $3,184.6 million for the Combined 2016 Company. The decrease in total operating expenses was primarily driven by the goodwill impairment charge of $712.8 million recorded during the Combined 2016 Company, while no impairment charge was recorded for the year ended December 31, 2017. Additional expense changes are described below.

Selling. Selling expense of $576.3 million for the year ended December 31, 2017 decreased $196.8 million, or 25.5%, compared to selling expense of $773.1 million for the Combined 2016 Company. This decrease was primarily driven by sales force synergies associated with YP integration related cost savings initiatives.

7 Cost of Service. Cost of service expense of $867.7 million for the year ended December 31, 2017 decreased $165.2 million, or 16.0%, compared to cost of service expense of $1,032.9 million for the Combined 2016 Company. This decrease was primarily driven by print and distribution processing efficiencies associated with YP integration related initiatives, as well as a reduction in these direct costs in line with our decline in sales volume.

General and Administrative. General and administrative expense of $298.5 million for the year ended December 31, 2017 increased $3.4 million, or 1.2%, compared to general and administrative expense of $295.1 million for the Combined 2016 Company. This increase is partially due to the incurrence of certain costs associated with business combination and integration activities. The increase is partially offset by reductions to corporate and administrative expenses, as well as facility related cost reductions achieved through progress made towards YP integration related initiatives.

Depreciation and Amortization. Depreciation and amortization expense of $338.0 million for the year ended December 31, 2017 decreased $32.7 million, or 8.8%, compared to depreciation and amortization expense of $370.7 million for the Combined 2016 Company. This decrease was primarily driven by lower amortization expense associated with intangible assets.

Impairment Charge. For the year ended December 31, 2017, we recorded no impairment charge. For the Combined 2016 Company, we recorded an impairment charge of $712.8 million related to the write down of goodwill.

Interest Expense, net

Interest expense of $109.5 million for the year ended December 31, 2017 decreased $111.3 million, or 50.4%, compared to interest expense of $220.8 million for the Combined 2016 Company. This decrease was primarily due to non-cash fresh start related interest expense adjustments included in the year ended December 31, 2016 with no such adjustments included in the year ended December 31, 2017. This was partially offset by an increase in interest expense associated with our higher outstanding debt obligations.

Gains on Early Extinguishment of Debt

The Company recorded non-taxable gains of $0.8 million related to the early extinguishment of a portion of senior secured credit facilities for the year ended December 31, 2017. The Company retired debt obligations of $20.3 million on its term loan utilizing cash of $19.5 million, which resulted in a gain recorded of $0.8 million.

During the Successor 2016 Period, the Successor Company retired debt obligations of $43.3 million on its term loan utilizing cash of $42.2 million. These transactions resulted in a gain of $1.1 million being recorded by the Company ($1.1 million gain offset by less than $0.1 million in administrative fees and other adjustments).

Liquidity and Capital Resources

The Company's primary source of liquidity is cash flow generated by operations, cash on hand, and amounts available under our credit facility and term loan, as discussed in "Line of Credit" and "Term Loan" below. The Company's ability to meet its debt service requirements is dependent on its ability to generate sufficient cash flows from operations. The primary source of cash flows are cash collections related to the sale of our advertising services. This cash flow stream can be impacted by, among other factors, general economic conditions, the decline in the use of our print products and increased competition in our markets.

We believe that expected cash flows from operations, available cash and cash equivalents, and funds available under our credit facility and term loan will be sufficient to meet our liquidity requirements for the following year, which include the working capital requirements of our operations; investments in our business; business development activities; and repayment of our credit facility and term loan. Any projections of future earnings and cash flows are subject to substantial uncertainty. We may need to access debt and equity markets in the future if unforeseen costs or opportunities arise, to meet working capital requirements, fund acquisitions or repay our indebtedness. If we need to obtain new debt or equity financing in the future, the terms and availability of such financing may be impacted by economic and financial market conditions as well as our financial condition and results of operations at the time we seek additional financing.

8 Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

Cash flows for the year ended December 31, 2017, the Successor Company, the Predecessor Company, and the Combined 2016 Company are presented in the following table and discussed below:

(1) (2) (1) - (2) Combined Successor Successor Predecessor 2016 Company Company Company Company Five Months Seven Ended Months Year Ended Year Ended December Ended July December December 31, 31, 31, 31, $ (in thousands) 2017 2016 2016 2016 Change

Cash Flows Provided By (Used In): Operating activities 240,793 132,814 67,416 200,230 40,563 Investing activities (600,394) (13,998) (4,044) (18,042) (582,352) Financing activities 320,230 (173,928) (141,908) (315,836) 636,066 (Decrease) In Cash and Cash Equivalents $ (39,371) (55,112) $ (78,536) $ (133,648) $ 94,277

Cash Flows from Operating Activities

Net cash provided by operating activities of $240.8 million for the year ended December 31, 2017 increased $40.6 million compared to $200.2 million for the year ended December 31, 2016. The increase was primarily due to the Company making no cash payments related to reorganization items during the year ended December 31, 2017, compared to $13.3 million during the year ended December 31, 2016. Additionally, the Company made lower cash payments related to business transformation costs of $11.1 million during the year ended December 31, 2017, compared to $32.0 million during the year ended December 31, 2016.

Cash Flows from Investing Activities

Net cash used in investing activities of $600.4 million for the year ended December 31, 2017 increased $582.4 million compared to $18.0 million for the year ended December 31, 2016. This increase was primarily due to the use of approximately $600.7 million for the YP acquisition in June 2017. The Company incurred $20.0 million in capital expenditures for the year ended December 31, 2017 compared to $20.5 million for the year ended December 31, 2016. Additionally, the Company received $7.3 million from the sale of land and buildings during the year ended December 31, 2017 compared to $2.5 million for the year ended December 31, 2016.

Cash Flows from Financing Activities

Net cash provided by financing activities of $320.2 million for the year ended December 31, 2017 increased $636.0 million compared to net cash used in financing activities of $315.8 million for the year ended December 31, 2016. Net cash used in financing activities primarily represents the repayment of debt principal.

During the year ended December, 31, 2017, the Successor Company received proceeds of $1,427.5 million from additional borrowings under the line of credit and $550.0 million of proceeds from additional borrowings from our term loan. These increases were offset by payments on the line of credit of $1,367.5 million. Additionally, during the year ended December 31, 2017, the Successor Company repurchased and retired $279.3 million of its term loan utilizing cash of $278.5 million. This included repurchases at par of $259.0 million and repurchases below par utilizing cash of $19.5 million to retire $20.3 million of the Successor Company's term loans. These transactions resulted in a gain of $0.8 million being recorded by the Successor Company.

During the Successor 2016 Period, the Successor Company retired $218.7 million on the term loan utilizing cash of $217.6 million. This included repurchases at par of $175.4 million and repurchases below par utilizing cash of $42.2 million to retire $43.3 million of the Successor Company's term loans. These transactions resulted in a gain of $1.1 million being recorded by the Successor Company ($1.1 million gain offset by less than $0.1 million in administrative fees and other adjustments). The 9 Successor Company also borrowed $100.0 million under a new line of credit with Wells Fargo Bank. Additionally, during the five months ended December 31, 2016, the Successor Company paid $52.4 million to the Predecessor Company's senior secured credit facilities holders as part of the settlement of the Predecessor Company's debt obligations.

During the Predecessor 2016 Period, the Predecessor Company made mandatory and accelerated principal payments on the senior secured credit facilities, at par of $136.9 million. Accelerated principal payments consist of prepayments of cash flow sweeps required under the senior secured credit facilities. Additionally, during the Predecessor 2016 Period, as part of the settlement of liabilities subject to compromise, the Predecessor Company made a $5.0 million payment to the senior subordinated note holders.

Indebtedness

Line of Credit

On December 15, 2016, the Company entered into a revolving credit agreement with Wells Fargo Bank, National Association, as Administrative Agent, whereby the Company may draw to finance ongoing general corporate and working capital needs. The Company may borrow up to a maximum amount of $150.0 million, subject to the terms and conditions of the credit agreement. The line of credit is secured by the Company’s accounts receivable and unbilled accounts receivable. The line of credit matures on April 29, 2021, and the interest rate is 3-month LIBOR plus 4.0%. To enter into the revolving credit agreement, the Company incurred debt issuance costs of $2.1 million. The debt issuance costs were reflected as an asset on December 31, 2016 and will be amortized ratably over the term of revolving credit agreement. On December 31, 2016 the Company had drawn $100.0 million on the line of credit. On April 21, 2017, the revolving line of credit agreement was amended to increase the maximum availability under the line of credit from $150.0 million to $200.0 million. On June 30, 2017, the revolving line of credit agreement was amended to increase the maximum availability under the line of credit from $200.0 million to $350.0 million and incurred additional debt issuance costs of $3.9 million. At December 31, 2017, due to the level of accounts receivable and unbilled accounts receivable available as security, the total availability under the line of credit was $295.0 million. The Successor Company had a balance of $5.3 million and $2.1 million of debt issuance costs related to the line of credit which are included in other non-current assets on the Consolidated Balance Sheets as of December 31, 2017 and December 31, 2016, respectively. These costs are amortized to interest expense over the remaining term of the revolving credit agreement on a straight line basis.

Term Loan

Upon emergence from bankruptcy, the Company entered into a credit agreement (the “Dex Media Credit Agreement”) with several banks and other financial institutions or entities party hereto (the “Lenders”) and Wilmington Trust, National Association, as administrative agent for such lenders with initial borrowings of $600.0 million. Debt issuance costs of $5.0 million were netted against the term loan. As a part of fresh start accounting, the term loan was recorded at its fair value resulting in the immediate recognition of expense of these debt issuance costs. See Note 3, Emergence from Chapter 11, to the accompanying consolidated financial statements contained herein for further information. On June 30, 2017, an additional $550.0 million was borrowed with the proceeds being used to finance the Company’s purchase of YP. As of December 31, 2017, the outstanding balance of the term loan is $652.0 million. This term loan has a maturity date of July 29, 2021. The Dex Media Credit Agreement interest is paid on the last day of the interest period applicable to such borrowing. The applicable rate is 10.00% per annum plus the greater of (a) the rate per annum determined on the basis of the rate for deposits for a period equal to such interest period or (b) 1.00%. Accordingly, the minimum per annum rate was 11.00%.

At December 31, 2017 and 2016, approximately 63.2% and 76.4%, respectively, of the term loan was held by related parties that collectively owned 81.2% and 75.1%, respectively, of the Company's common stock.

Debt Covenants

The term loan contains certain covenants that, subject to exceptions, limit or restrict the borrower's incurrence of liens, investments, acquisitions, sales of assets, additional indebtedness, payment of dividends, distributions and payments of certain indebtedness, sale and leaseback transactions, swap transactions, certain affiliate transactions, capital expenditures, mergers, liquidations and consolidations. For the term loan, the Company is required to maintain compliance with a consolidated leverage ratio covenant not to exceed five times earnings before interest, depreciation and amortization. These covenants also require that the Company submit audited financial statements to the lenders no later than 120 days after the Company's year- end. This required the Company to complete its audited financial statements on or before April 30, 2018, which the Company was not able to achieve. The lenders amended the terms of this covenant prior to April 30, 2018, such that an additional 60 days

10 was allowed for the Company's 2017 year-end audit. As of the issue date of these financial statements, this covenant, along with all other covenants were met.

Predecessor Debt 2016

During the seven months ended July 31, 2016, the Predecessor Company made mandatory and accelerated principal payments on its senior secured credit facilities, at par, of $136.9 million. Accelerated principal payments consist of prepayments of cash flow sweeps required under the senior secured credit facilities.

As part of the bankruptcy, during the seven months ended July 31, 2016, the Predecessor Company made a $5.0 million payment and issued stock warrants to the senior subordinated note holders.

Report of Independent Auditors

The Board of Directors and Shareholders Dex Media Holdings, Inc. and subsidiaries

We have audited the accompanying consolidated financial statements of Dex Media Holdings, Inc. and subsidiaries, which comprise the consolidated balance sheets as of December 31, 2017 and 2016 (the “Successor Company” consolidated balance sheets), and the related consolidated statements of comprehensive income (loss), changes in shareholders’ equity (deficit) and cash flows for the year ended December 31, 2017, and for the period from August 1, 2016 through December 31, 2016 (the Successor Company operations and cash flows), and for the period from January 1, 2016 through July 31, 2016, and for the year ended December 31, 2015 (the Predecessor Company operations and cash flows), and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the Successor Company consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Dex Media Holdings, Inc. and subsidiaries at December 31, 2017 and 2016, and the consolidated results of their operations and their cash flows for the year ended December 31, 2017, and for the period from August 1, 2016 through December 31, 2016, in conformity with U.S. generally accepted accounting principles. Further, in our opinion, the Predecessor Company consolidated financial statements referred to above present fairly, in all material respects, the consolidated results of their operations and their cash flows for the period from January 1, 2016 through July 31, 2016, and for the year ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.

Company Reorganization

As discussed in Note 1 to the consolidated financial statements, on July 15, 2016, the Bankruptcy Court entered an order confirming the plan of reorganization, which became effective on July 29, 2016. Accordingly, the accompanying consolidated financial statements have been prepared in conformity with Accounting Standards Codification 852-10, Reorganizations, for the Successor Company as a new entity with assets, liabilities and a capital structure having carrying amounts not comparable with prior periods as described in Note 1. ey Dallas, Texas June 8, 2018

12 Dex Media Holdings, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income (Loss)

Successor Company Predecessor Company Five Months Year Ended Ended Seven Months Year Ended December 31, December 31, Ended July 31, December 31, (in thousands) 2017 2016 2016 2015

Operating Revenue $ 1,318,166 $ 230,341 $ 712,628 $ 1,498,074

Operating Expenses Selling 364,588 84,353 176,564 345,216 Cost of service (exclusive of depreciation and amortization) 544,386 134,228 267,107 510,696 General and administrative 279,558 52,729 89,646 181,465 Depreciation and amortization 301,435 128,947 150,454 410,415 Impairment charge — 712,795 — — Total Operating Expenses 1,489,967 1,113,052 683,771 1,447,792 Operating (Loss) Income (171,801) (882,711) 28,857 50,282 Interest expense, net 67,815 27,584 134,753 354,612 (Loss) Before Reorganization Items and Fresh Start Adjustments, Gains on Early Extinguishment of Debt and Provision (Benefit) for Income Taxes (239,616) (910,295) (105,896) (304,330) Reorganization items and fresh start adjustments, net — — 1,843,991 — Gains on early extinguishment of debt 751 1,056 — 1,250 (Loss) Income Before Provision (Benefit) for Income Taxes (238,865) (909,239) 1,738,095 (303,080) Provision (benefit) for income taxes (67,541) (286,724) 441,500 (39,617) Net (Loss) Income $ (171,324) $ (622,515) $ 1,296,595 $ (263,463)

Other Comprehensive Income Adjustments for pension benefits, net of taxes — — 1,067 1,624 Comprehensive (Loss) Income $ (171,324) $ (622,515) $ 1,297,662 $ (261,839)

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

Dex Media Holdings, Inc. and Subsidiaries Consolidated Balance Sheets

Successor Company At December 31, (in thousands, except share data) 2017 2016

Assets Current Assets Cash and cash equivalents $ 2,038 $ 41,409 Accounts receivable, net of allowances of $31,193 and $7,708 188,803 129,500 Unbilled accounts receivable 48,142 93,338 Accrued tax receivable 25,117 — Deferred directory costs 136,296 60,122 Prepaid expenses and other 16,398 19,332 Total current assets 416,794 343,701 Fixed assets and capitalized software, net 152,330 40,291 Goodwill 609,457 325,993 Intangible assets, net 532,394 536,988 Other non-current assets 36,953 6,123 Total Assets $ 1,747,928 $ 1,253,096

Liabilities and Shareholders' Equity Current Liabilities Current portion of financing obligations $ 3,480 $ — Accounts payable and accrued liabilities 265,446 106,363 Accrued interest 2,692 480 Deferred revenue 75,270 31,900 Total current liabilities 346,888 138,743 Term loan 652,000 381,287 Line of credit 160,012 100,000 Financing obligations, net of current portion 56,980 — Employee benefit obligations 214,389 115,995 Deferred tax liabilities 50,943 145,807 Unrecognized tax benefits 50,500 3,753 Other liabilities 2,660 804

Shareholders' Equity Common stock, par value $.01 per share, authorized – 250,000,000 shares; issued and outstanding – 103,196,920 shares at December 31, 2017 and 99,948,433 shares at December 31, 2016 1,032 999 Additional paid-in capital 1,006,363 988,223 Retained (deficit) (793,839) (622,515) Total shareholders' equity 213,556 366,707 Total Liabilities and Shareholders' Equity $ 1,747,928 $ 1,253,096

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

14 Dex Media Holdings, Inc. and Subsidiaries Consolidated Statements of Changes in Shareholders' Equity (Deficit)

Common Stock

Accumulated Other Total Additional Comprehensive Shareholders’ Par Paid-in Retained Income Equity (in thousands) Shares Issued Value Capital (Deficit) (Loss) (Deficit) Balance, December 31, 2014 (Predecessor Company) 17,608,580 $ 17 $ 1,554,298 $ (2,591,185) $ (85,363) $ (1,122,233) Net (loss) — — (263,463) — (263,463) Issuance of equity based awards (89,691) — 2,225 — — 2,225 Other comprehensive income, net of tax — — — 1,624 1,624

Balance, December 31, 2015 (Predecessor Company) 17,518,889 17 1,556,523 (2,854,648) (83,739) (1,381,847) Net income, seven months ended July 31, 2016 — — 1,296,595 — 1,296,595 Issuance of stock-based equity awards — 353 — — 353 Pension benefits accumulated other comprehensive income adjustments — — — 7,250 7,250 Balance, July 31, 2016 (Predecessor Company) 17,518,889 17 1,556,876 (1,558,053) (76,489) (77,649) Fresh start pension remeasurement adjustment — — — (8,317) (8,317) Cancellation of Predecessor Company's common stock (17,518,889) (17) — 17 — — Acceleration of stock-based compensation — 1,160 — — 1,160 Cancellation of Predecessor Company's additional paid- in-capital — (1,558,036) 1,558,036 — — Elimination of Predecessor Company's accumulated other comprehensive (loss) — — — 84,806 84,806 Balance, July 31, 2016 (Predecessor Company) — — — — — — Issuance of Successor common stock 99,948,433 999 984,001 — — 985,000

Balance, July 31, 2016 (Successor Company) 99,948,433 999 984,001 — — 985,000 Net (loss), five months ended December 31, 2016 (622,515) (622,515)

Issuance of stock warrants — 4,222 — — 4,222

15 Common Stock

Accumulated Other Total Additional Comprehensive Shareholders’ Par Paid-in Retained Income Equity (in thousands) Shares Issued Value Capital (Deficit) (Loss) (Deficit)

Balance, December 31, 2016 (Successor Company) 99,948,433 999 988,223 (622,515) — 366,707 Issuance of common stock and additional paid-in-capital from YP acquisition 3,248,487 33 18,140 — — 18,173 Net (loss), year ended December 31, 2017 — — (171,324) — (171,324) Balance, December 31, 2017 (Successor Company) 103,196,920 $1,032 $ 1,006,363 $ (793,839) $ — $ 213,556

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

16 Dex Media Holdings, Inc. and Subsidiaries Consolidated Statements of Cash Flows Successor Company Predecessor Company Five Months Year Ended Ended Seven Months Year Ended December 31, December 31, Ended July 31, December 31, (in thousands) 2017 2016 2016 2015 Cash Flows from Operating Activities Net (loss) income $ (171,324) $ (622,515) $ 1,296,595 $ (263,463) Reconciliation of net (loss) income to net cash provided by operating activities: Depreciation and amortization 301,435 128,947 150,454 410,415 Amortization of debt issuance costs and other non- cash interest 1,048 264 48,088 112,252 Deferred taxes (141,996) (288,069) 440,032 (33,450) Accrued income taxes (22,257) 2,425 (2,470) (6,067) Provision for bad debts 19,670 1,852 11,808 24,772 Stock-based compensation expense 23,364 1,282 1,513 2,243 Stock warrants expense (benefit), net — (29,667) — — Employee retiree benefits 32,275 35,702 1,475 14,961 Impairment charge — 712,795 — — Gains on early extinguishment of debt (751) (1,056) — (1,250) Loss on sale of property, plant and equipment 2,758 — — — Non-cash gain from remeasurement of indemnification assets (6,191) — — — Non-cash reorganization and fresh start items: Non-cash reorganization gain — — (636,229) — Fresh start adjustments, net — — (1,299,922) — Other non-cash reorganization items, net — — 77,101 — Changes in working capital items, excluding acquisitions: Accounts receivable, including unbilled 261,580 210,374 (32,874) 2,634 Deferred revenue 25,513 33,354 12,461 (24,296) Deferred directory costs (56,850) (44,789) 10,099 43,758 Other current assets 16,389 (6,524) 3,640 (3,552) Accounts payable, accrued liabilities, and other (43,870) (1,561) (14,355) (60,020) Net cash provided by operating activities 240,793 132,814 67,416 218,937 Cash Flows from Investing Activities Additions to fixed assets and capitalized software (19,992) (13,999) (6,497) (16,575) Cash paid for acquisition, net (587,734) — — — Proceeds from sale of building/fixed assets 7,332 1 2,453 4,805 Net cash (used in) investing activities (600,394) (13,998) (4,044) (11,770) Cash Flows from Financing Activities Debt repayments - Predecessor Company related debt — (54,128) (141,908) (198,664) Proceeds from term loan 550,000 — — — Paydowns on term loan (278,535) (217,652) — — Proceeds from line of credit 1,427,498 100,000 — — Paydowns on line of credit (1,367,485) — — — Payments of capital lease obligations (7,073) — — — Debt issuance costs and other financing items (4,175) (2,148) — (4,928) Net cash provided by (used in) financing activities 320,230 (173,928) (141,908) (203,592)

17 Dex Media Holdings, Inc. and Subsidiaries Consolidated Statements of Cash Flows Successor Company Predecessor Company Five Months Year Ended Ended Seven Months Year Ended December 31, December 31, Ended July 31, December 31, (in thousands) 2017 2016 2016 2015 (Decrease) increase in cash and cash equivalents (39,371) (55,112) (78,536) 3,575 Cash and cash equivalents, beginning of period 41,409 96,521 175,057 171,482 Cash and cash equivalents, end of period $ 2,038 $ 41,409 $ 96,521 $ 175,057

Supplemental Information Cash interest on debt $ 64,628 $ 28,515 $ 88,641 $ 231,668 Cash income taxes, net $ 96,712 $ (1,080) $ 3,938 $ (100)

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

Supplemental Schedule of Non-Cash Investing and Financing Activities

On June 30, 2017, the Company completed the acquisition of YP Holdings for $600.7 million in cash and 3,248,487 shares of the Company's common stock, with a fair value of $18.2 million. See Note 2, Acquisition of YP Holdings, to the accompanying consolidated financial statements contained herein for further information.

See Note 5, Stock Warrants, to the accompanying consolidated financial statements contained herein for detail regarding non- cash financing activities associated with our issuance of warrants in exchange for debt.

18 DEX MEDIA HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Description of Business and Summary of Significant Accounting Policies

General

The Company's local marketing solutions are primarily sold under various “Dex” and “YP” brands, including print yellow page directories, online local search engine websites, mobile local search applications, and placement of client’s information and advertisements on major search engine websites with which the Company is affiliated. DexYP's local marketing solutions also include website development, search engine optimization, market analysis, video development and promotion, reputation management, social media marketing, and tracking/reporting of customer leads. The Company also offers an all- in-one small business management software as a service (SAAS) solution under the brand name Thryv. This system provides the day-to-day essential tools needed to compete in the modern marketplace. The software solution comes complete with a customer relationship management tool (CRM), customer communication tools, invoicing and estimation tools, payment processing, appointment scheduling, social profile management, email & text marketing, and online presence tools.

DexYP's print yellow page directories are co-branded with various local telephone service providers; including Verizon Communications Inc., AT&T Inc., CenturyLink, Inc., FairPoint Communications, Inc., and Frontier Communications Corporation. The Company operates as the authorized publisher of print yellow page directories in some of the markets where they provide telephone service and holds multiple agreements governing relationships with each company, including publishing agreements, branding agreements, and non-competition agreements.

In 2017, DexYP published approximately 2,000 distinct directory titles in 48 states and distributed approximately 116 million directories to businesses and residences in the United States. In 2017, the Company's top ten directories, as measured by revenue, accounted for approximately 2% of total revenue and no single directory or local client accounted for more than 1% of total revenue.

Dex Media was originally created as a result of the merger between Dex One Corporation (“Dex One”) and SuperMedia Inc. (“SuperMedia”) on April 30, 2013. Dex One was the acquiring company for accounting purposes.

Dex One became the successor registrant to R.H. Donnelley Corporation (“RHDC”) upon emergence from Chapter 11 proceedings on January 29, 2010. RHDC was formed on February 6, 1973 as a Delaware corporation. In November 1996, RHDC, then known as The Dun & Bradstreet Corporation, separated through a spin-off into three separate public companies: The Dun and Bradstreet Corporation, ACNielsen Corporation, and Cognizant Corporation. In June 1998, The Dun & Bradstreet Corporation separated through a spin-off into two separate public companies: RHDC (formerly The Dun & Bradstreet Corporation) and a new company that changed its name to The Dun & Bradstreet Corporation. In January 2003, RHDC acquired the directory business of Sprint Corporation (formerly known as Sprint Nextel Corporation). In September 2004, RHDC completed the acquisition of the directory publishing business of AT&T, Inc. (formerly known as SBC

19 Communications, Inc.) in Illinois and Northwest Indiana, including AT&T's interest in the DonTech II Partnership (“DonTech”), a 50/50 general partnership between RHDC and AT&T. In January 2006, RHDC acquired the exclusive publisher of the directories for Qwest Communications International Inc. (“Qwest”) where Qwest was the primary local telephone service provider.

SuperMedia became the successor company to Idearc, Inc. upon emergence from Chapter 11 bankruptcy proceedings on December 31, 2009. Idearc, Inc. was created in November 2006 when Verizon spun-off its domestic directory business.

Delisting from Nasdaq and Deregistration from the U.S. Securities and Exchange Commission

On June 30, 2015, Dex Media received a deficiency notice from The Nasdaq Stock Market LLC (“Nasdaq”), stating that for the last 30 days it had not met the $15.0 million minimum market value of publicly held shares continued listing standard (the “Minimum Market Value Requirement”), as required by Nasdaq Listing Rule 5450(b)(3)(C). As provided in the Nasdaq rules, Dex Media had 180 calendar days, or until December 28, 2015 to regain compliance. In order to regain compliance, market value of the publicly held shares must be $15.0 million or more for a minimum of ten consecutive days at any time prior to December 28, 2015.

On August 6, 2015, Dex Media received a deficiency notice from Nasdaq, stating that for the last 30 consecutive days its common stock did not maintain a minimum closing bid price of $1.00 per share (the “Minimum Bid Price Requirement”), as required by Nasdaq Listing Rule 5450(a)(1). As provided in the Nasdaq rules, Dex Media had 180 calendar days, or until February 2, 2016, to regain compliance.

On December 29, 2015, Dex Media received a letter from Nasdaq, stating that Nasdaq has determined that the Predecessor Company’s securities will be delisted from the Nasdaq Global Select Market due to its inability to regain compliance with the $15.0 million Minimum Market Value Requirement. Dex Media did not appeal Nasdaq’s determination. On January 26, 2016, Nasdaq filed a Form 25-NSE with the Securities and Exchange Commission which removed the Predecessor Company’s securities from listing and registration on The Nasdaq Stock Market.

Pursuant to the requirements of the Securities Act of 1934, Dex Media filed a Form 15 on February 5, 2016 and suspended its duty to file reports under sections 13 and 15(d) of the Securities Exchange Act of 1934.

Capital Restructuring

As announced by Dex Media on July 10, 2015, Dex Media retained financial advisors Moelis & Company LLC and Alvarez & Marsal North America, LLC and legal advisors Kirkland & Ellis LLP to advise management and the board of directors in their evaluation of Dex Media’s capital structure, among other things. As announced by the Predecessor Company on September 30, 2015, certain of Dex Media’s lenders formed an Ad Hoc Group (the “Group”) for the purposes of negotiating a restructuring of the Predecessor Company’s senior secured credit facilities and engaged in such negotiations with Dex Media. The Ad Hoc Group retained Houlihan Lokey as the Group’s financial advisor and Milbank, Tweed, Hadley & McCloy as the Group’s legal advisor. In addition, effective October 12, 2015, Dex Media appointed Andrew D.J. Hede as Chief Restructuring Officer, pursuant to an agreement between Dex Media and Alvarez & Marsal North America, LLC. During the year ended December 31, 2015, the Predecessor Company incurred $22.6 million of capital restructuring costs. During the seven months ended July 31, 2016, the Predecessor Company incurred $22.5 million of capital restructuring costs. These costs are related to advisory fees, which are included as part of general and administrative expense on the Consolidated Statement of Comprehensive Income (Loss). The Successor Company did not incur any capital restructuring charges during the five months ended December 31, 2016 or during the year ended December 31, 2017.

Each of the Debtors’ four secured credit facilities and subordinated notes were scheduled to mature on December 31, 2016 or January 29, 2017. As of December 31, 2015, the Debtors were in breach of their covenants under two of their secured credit facilities. As of June 30, 2016, the Predecessor Company was not in compliance with the financial covenants associated with all four of its senior secured credit facilities. As described below, however, the Debtors entered into a forbearance agreement with their term loan lenders regarding such breaches as well as the breach arising from the Debtors’ decision not to make the October 2015 interest payment under the Subordinated Notes.

To address the upcoming maturities, an ad hoc group of term loan lenders under the four secured credit facilities (the “Ad Hoc Lender Group”) organized to coordinate discussions with the Debtors to explore restructuring alternatives. With the assistance of their respective advisors, the Debtors, the Ad Hoc Lender Group, and the administrative agents under the secured credit facilities engaged in discussions where the Debtors elected not to make their semi-annual interest payment due

20 September 30, 2015 on the senior subordinated notes and used the grace period under their subordinated notes to continue negotiations with the Ad Hoc Lender Group.

The forbearance agreement provided sufficient time to finalize negotiations with the Ad Hoc Lender Group on the restructuring support agreement and plan term sheet. The Debtors and the Ad Hoc Lender Group also engaged in constructive negotiations with the Ad Hoc Note Holder Group during this process. The Debtors ultimately reached an agreement with parties holding approximately 69 percent in aggregate of claims under the Credit Agreements (the “Supporting Lenders”) and approximately 80 percent of claims under the Subordinated Notes (the “Supporting Noteholders”) for a consensual balance sheet restructuring transaction. Notably, the restructuring provided a meaningful recovery to general unsecured stakeholders. Ultimately, the Debtors successfully negotiated a Plan that paid trade and known general unsecured claims in full.

The restructuring transaction, which was memorialized in a restructuring support agreement (“RSA”), provided that the Debtors and the Supporting Lenders, with the support of the Supporting Noteholders, pursue a consensual, prepackaged Chapter 11 plan of reorganization. Under the terms of the RSA, Dex Media significantly reduced its outstanding debt, see Note 3, Emergence from Chapter 11, to these consolidated financial statements for further details.

Bankruptcy Filing

On the Petition Date, Dex Media, Inc. and certain of its affiliates, as the Debtors, filed with the Bankruptcy Court the Plan pursuant to sections 1125 and 1126(b) of title 11 of the Bankruptcy Code. The Plan was a voluntary “prepackaged” plan of reorganization. The primary purpose of the Plan was to effectuate a balance sheet restructuring of the Debtors’ business (the “Restructuring”).

Reorganization Process

Beginning May 16, 2016, the Predecessor Company operated as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In general, debtors-in-possession are authorized under Chapter 11 to continue to operate as an ongoing business but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court. The Predecessor Company's business continued to generate positive cash flow necessary for daily operations and as such, debtor-in-possession financing was not required.

The Bankruptcy Court approved several of the Predecessor Company’s “first day” motions, including payment of pre-petition and post-petition obligations related to employee wages, salaries and benefits, taxes, certain customer obligations, and certain customer programs. The Plan provided that trade and known general unsecured claims were to be paid in full. Dex Media also continued to retain certain legal and financial professionals and certain other “ordinary course” professionals to advise the Predecessor Company on the bankruptcy proceedings.

In order to successfully emerge from Chapter 11, the Company was required to propose and obtain confirmation by the Bankruptcy Court of a plan of reorganization that satisfies the requirements of the Bankruptcy Code. A plan of reorganization would resolve the Predecessor Company’s pre-petition obligations, set forth the revised capital structure of the newly reorganized entity, and provide for corporate governance subsequent to emergence from bankruptcy.

For the period subsequent to the Chapter 11 bankruptcy filing and until emergence from bankruptcy, the Predecessor Company prepared its consolidated financial statements in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 852, “Reorganizations,” (“ASC 852”). ASC 852 requires that the financial statements distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain expenses (including professional fees), realized gains and losses, and provisions for losses that are realized from the reorganization and restructuring process were classified as reorganization items on the Consolidated Statement of Comprehensive Income (Loss). Additionally, on the Consolidated Balance Sheet, liabilities were segregated between liabilities not subject to compromise and liabilities subject to compromise (see Note 3, Emergence from Chapter 11, to these consolidated financial statements). Liabilities subject to compromise were reported at their pre-petition amounts or current unimpaired values, even if they were to be settled for lesser amounts.

During the period in which the Company was in bankruptcy, the consolidated financial statements were prepared assuming the Predecessor Company would continue as a going concern, although the Chapter 11 bankruptcy filing raised substantial doubt about the ability to continue as a going concern. The consolidated financial statements for these periods do not include any adjustments related to recoverability and classification of recorded assets or the amounts classified as liabilities or any other adjustments that might be necessary if the Predecessor Company could not have continued as a going concern. 21 Recovery Analysis

The Plan provided for a comprehensive restructuring of the Debtors' prepetition obligations, provided for additional liquidity by significantly reducing debt service, preserved the going-concern value of the Debtors' business, and protected the jobs of employees. After a review of their current operations, prospects as an ongoing business, financial projections, and estimated recoveries to creditors in a liquidation scenario, the Debtors concluded that recoveries to the Debtors' stakeholders would be maximized by the Debtors' continued operation as a going concern. The Debtors believed that their businesses and assets have significant value that would not be realized through liquidation, either in whole or in substantial part, and that the value of the Debtors' estates was considerably greater as a going concern. In developing the Plan, the Debtors gave due consideration to various exit alternatives and engaged in extensive discussions and negotiations with all their key stakeholders. The Debtors determined that the Plan provided for the highest and best recovery for their stakeholders under the circumstances.

Confirmation of Plan and Emergence from Bankruptcy

On July 15, 2016, a Confirmation Hearing was held, at which time, the Plan was confirmed. On July 29, 2016, the Effective Date, the Bankruptcy Court finalized the bankruptcy proceeding, and the Company successfully emerged from bankruptcy. The Company qualified for “fresh start accounting” upon emergence from bankruptcy and re-valued its assets and liabilities as required by ASC 852.

Basis of Presentation

On June 30, 2017, the Company completed the acquisition of YP Holdings, a leading marketing solutions and search platform provider and publisher of the Real Yellow Pages and YP.com, for $618.9 million of cash and stock. The Company acquired substantially all of the assets and assumed substantially all of the liabilities, in each case, other than specified assets and liabilities. As a result of acquisition accounting, YP's historical results through June 30, 2017 have not been included in the Company's consolidated results. YP's post-Acquisition results from July 1, 2017 through December 31, 2017 are included in the consolidated financial statements of the Company, representing $439.8 million of operating revenue and ($28.0) million of net (loss). See Note 2, Acquisition of YP Holdings, to these consolidated financial statements contained herein for further information.

The Company emerged from bankruptcy on July 29, 2016. As allowed under GAAP, the Company adopted fresh start accounting and reporting. Due to the proximity of the Effective Date to the date of the Company’s accounting period close of July 31, 2016, the Company adopted fresh start accounting and reporting as of July 31, 2016 (“Convenience Date”). The Company performed a qualitative and quantitative assessment in order to determine the appropriateness of using the Convenience Date for fresh start accounting instead of the Effective Date. The Company’s assessment determined that the use of the Convenience Date did not have a material impact on either the predecessor or successor periods in 2016 and no qualitative factors that would preclude the use of the Convenience Date for accounting and reporting purposes. The adoption of fresh start accounting resulted in the Company becoming a new entity for financial reporting purposes.

The consolidated financial statements for the periods ended prior to July 31, 2016 do not include the effect of any changes in the Company’s capital structure or changes in the fair value of assets and liabilities as a result of fresh start accounting. The results of operations for the seven months ended July 31, 2016 includes a pre-tax, net gain of $1,844.0 million for reorganization items, including a pre-emergence gain of $630.2 million from the discharge of liabilities under the plan and a gain of $1,299.9 million associated with fresh start adjustments, offset by a charge of $86.1 million for post-petition reorganization items.

The historical consolidated financial statements of the pre-emerged Company are presented separately from the post-emerged Company. The consolidated financial statements for the periods prior to July 31, 2016 relate to the Predecessor Company. The consolidated financial statements for the periods subsequent to July 31, 2016 relate to the Successor Company. Any presentation of the Successor Company represents the financial position and results of operations of a new reporting entity and are not comparable to the prior periods presented for the Predecessor Company.

22 The accompanying consolidated financial statements included in this report have been prepared on a going-concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company's consolidated financial statements do not include any adjustments that might result from the resolution of this uncertainty.

The accompanying consolidated financial statements contain all adjustments, consisting of normal recurring items and accruals, necessary to fairly present the financial position, results of operations and cash flows of the Successor Company and the Predecessor Company, respectively. All inter-company accounts and transactions have been eliminated. The Successor Company is managed as a single reporting unit.

Use of Estimates

Summary of Significant Accounting Policies

Revenue Recognition

Revenue is earned from the sale of print directory and digital advertising. The Company is not generally affected by seasonality given revenue is largely recognized on a straight-line basis over the contract periods.

Revenue derived from print directory advertising is recognized ratably over the life of each directory using the deferral and amortization method of accounting, with revenue recognition commencing in the month of publication.

Revenue derived from digital advertising is earned primarily from two sources: fixed-fee and performance-based advertising. Fixed-fee advertising includes advertisement placement on the Company's and other local search websites, website development, and website hosting for client advertisers. Revenue from fixed-fee advertising is recognized ratably over the life of the advertising service. Performance-based advertising revenue is earned when consumers connect with client advertisers by a “click” or “action” on their digital advertising or a phone call to their business. Performance-based advertising revenue is recognized when there is evidence that qualifying transactions have occurred or over the service period of the arrangement, as applicable.

The Company offers multiple-element revenue arrangements with customers that may include a combination of print and digital marketing solutions. The timing of delivery or fulfillment of marketing solutions in a multiple-element arrangement may differ, whereby the fulfillment of a digital marketing solution precedes delivery of 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- element arrangement may be published at different times throughout the year. The Company limits 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-element arrangement.

The Company evaluates each deliverable in a multiple-element revenue arrangement to determine whether it represents 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 the Company's print and digital marketing solutions qualify as separate units of accounting since they have value to the customer on a stand-alone basis, and the Company allocates multiple-element arrangement consideration to each deliverable based on its estimated stand-alone selling price. Sales contracts generally do not include any provisions for cancellation, termination, right of return or refunds that would significantly impact recognized revenue. In determining estimated selling prices, the Company requires that a majority of selling prices are consistent with normal pricing and discounting policies, which have been established by management having relevant authority.

23 Expense Recognition

Costs directly attributable to producing directories are amortized over the predominant life of the directories under the deferral and amortization method of accounting. Direct costs include paper, printing, initial distribution, and sales commissions. All other costs are recognized as incurred.

Cash and Cash Equivalents

Highly liquid investments with a maturity of 90 days or less when purchased are considered to be cash equivalents. The Successor Company's cash and cash equivalents consist of bank deposits. Cash equivalents are stated at cost, which approximates market value. As of December 31, 2017 and 2016, the Successor Company's cash and cash equivalents were valued at $2.0 million and $41.4 million, respectively.

Accounts Receivable

At December 31, 2017 and 2016, the Successor Company’s Consolidated Balance Sheets had accounts receivables of $188.8 million and $129.5 million, net of an allowance for doubtful accounts of $31.2 million and $7.7 million, respectively.

Receivables are recorded net of an allowance for doubtful accounts. The allowance for doubtful accounts is calculated using a percentage of sales method based upon collection history and an estimate of uncollectible accounts. Judgment is exercised in adjusting the provision as a consequence of known items, such as current economic factors and credit trends. Accounts receivable adjustments are recorded against the allowance for doubtful accounts.

Concentrations of Credit Risk

Financial instruments subject to concentrations of credit risk consist primarily of short-term investments, trade receivables, and debt. Company policy requires the deposit of temporary cash investments with major financial institutions. Cash balances at major financial institutions may exceed FDIC insured limits.

Approximately 90% of revenue in all periods presented was derived from the sale of advertising to local small and medium sized businesses that advertise in limited geographical areas. These advertisers are usually billed in monthly installments after the advertising has been published and, in turn, make monthly payments, requiring the Successor Company to extend credit to these customers. This practice is widely accepted within the industry. While most new advertisers and those wanting to expand their current media solutions are subject to a credit review, the default rates of small and medium sized companies are generally higher than those of larger companies.

The remaining 10% of revenue in all periods presented was derived from the sale of advertising to larger businesses that advertise regionally or nationally. Contracted certified marketing representatives (“CMRs”) purchase advertising on behalf of these advertisers. Payment for advertising is due when the advertising is published and is received directly from the CMRs, net of the CMRs' commission. The CMRs are responsible for billing and collecting from the advertisers. While the Successor Company still has exposure to credit risks, historically, the losses from this client set have been less than that of local advertisers.

Fixed Assets and Capitalized Software

The cost of additions and improvements associated with fixed assets are capitalized if they have a useful life in excess of one year. Expenditures for repairs and maintenance, including the cost of replacing minor items not considered substantial betterments, are expensed as incurred. When fixed assets are sold or retired, the related cost and accumulated depreciation are deducted from the accounts and any gains or losses on disposition are recognized in the Consolidated Statements of Comprehensive Income (Loss). Fixed assets are reviewed for impairment whenever events or changes in circumstances may indicate that the carrying amount of an asset may not be recoverable. In addition, the remaining useful lives are reviewed annually for reasonableness.

Costs associated with internal use software are capitalized during the application development stage, if they have a useful life in excess of one year. Subsequent additions, modifications, or upgrades to internal use software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Capitalized software is reviewed for impairment whenever events or changes in circumstances may indicate that the carrying amount of an asset may not be recoverable.

24 Fixed assets and capitalized software are depreciated on a straight-line basis over the estimated useful lives of the assets, which are presented in the following table:

Estimated Useful Lives Buildings and building improvements 8-30 years Leasehold improvements 3-8 years Computer and data processing equipment 3 years Furniture and fixtures 7 years Capitalized software 3 years Other 3-7 years

Leasehold improvements are depreciated at the lesser of their estimated useful lives or the lease term. For additional information related to fixed assets and capitalized software, see Note 8, Fixed Assets and Capitalized Software, to these consolidated financial statements.

Goodwill and Intangible Assets

The Successor Company has goodwill of $609.5 million and $326.0 million and intangible assets of $532.4 million and $537.0 million on the Consolidated Balance Sheets as of December 31, 2017 and 2016, respectively.

Goodwill

In accordance with GAAP, impairment testing for goodwill is to be performed at least annually unless indicators of impairment exist in interim periods. The Company has elected to early adopt the provisions of ASU 2017-04 effective October 1, 2017. Accordingly, the Company no longer uses the two-step approach. The Company continues to perform its impairment test for goodwill at the reporting unit level. The Successor Company has one reporting unit. In accordance with ASU 2017-04, the Company compares the fair value of the reporting unit to its carrying value. In performing the impairment test, the Successor Company estimated the fair value of the reporting unit using a combination of the income and market approaches, for purposes of estimating the total enterprise value of the Successor Company. If the carrying value exceeds the fair value, the Company will recognize an impairment charge up to this amount but not to exceed the total carrying value of the reporting unit's goodwill.

On October 1, 2017, the Successor Company performed its annual impairment test under the provisions of ASU 2017-04 and concluded there was no impairment of goodwill.

On October 1, 2016, the Successor Company performed its annual impairment test and concluded there was no impairment of goodwill. Since the annual impairment test was performed only two months following the measurement and recognition of goodwill as required by fresh start accounting; no new data was available, so the Successor Company utilized the same cash flow forecasts and assumptions utilized for recognition of goodwill at fresh start. Due to a reduction in stock prices in the fourth quarter of 2016 and the development of new cash flow forecasts using Level 3 inputs, the Company decided to test for impairment of goodwill at year-end as indicators of impairment were identified. As a result of impairment testing as of December 31, 2016, it was determined that the carrying value of the Company's reporting unit, including goodwill, exceeded the fair value of the reporting unit, requiring the Successor Company to perform step two of the goodwill impairment test to determine the amount of impairment loss. This test resulted in a goodwill impairment charge of $712.8 million, which was recognized in the Successor Company’s Consolidated Statement of Comprehensive Income (Loss) for the five months ended December 31, 2016.

Subsequent to completion of our October 1, 2015 impairment review and through our bankruptcy filing on May 16, 2016 (the "Petition Date"), the Company determined based on its current and future cash flow generating forecasts and related valuations, filed as part of the plan of reorganization, that no interim indicators of impairment were identified.

The Predecessor Company performed its annual impairment test of goodwill as of October 1, 2015. There was no impairment of goodwill in 2015, as the Predecessor Company determined the fair value of the SuperMedia reporting unit exceeded the carrying value of the reporting unit.

25 Intangible Assets

Intangible assets are recorded separately from goodwill if they meet certain criteria. All of the Successor Company’s intangible assets are classified as definite-lived intangible assets. The Successor Company's intangible assets are amortized using the income forecast method over their useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The recoverability analysis includes estimates of future cash flows directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the definite-lived intangible asset. An impairment loss is measured as the amount by which the carrying amount of the definite-lived intangible asset exceeds its fair value. The Successor Company evaluated its definite-lived assets for potential impairment and determined they were not impaired as of December 31, 2017 and 2016. The Predecessor Company evaluated its definite-lived assets for potential impairment and determined they were not impaired as of December 31, 2015.

The Successor Company’s intangible assets and their estimated remaining useful lives are presented in the table below:

Estimated Remaining Useful Lives Client relationships 3.5 to 4 years Trademarks and domain names 2.5 to 6 years Patented technologies 3 to 3.5 years

For additional information related to goodwill and intangible assets, see Note 4, Goodwill, Intangible Assets & Impairment, to these consolidated financial statements.

Pension Benefits

The Successor Company has non-contributory defined benefit pension plans that provide pension benefits to certain of its employees. The accounting for pension benefits reflects the recognition of these benefit costs over the employee’s approximate service period based on the terms of the plan and the investment and funding decisions made. The determination of the benefit obligation and the net periodic pension cost requires management to make actuarial assumptions, including the discount rate and expected return on plan assets. For these assumptions, management consults with actuaries, monitors plan provisions and demographics, and reviews public market data and general economic information. Changes in these assumptions can have a significant impact on the projected benefit obligation, funding requirement and net periodic benefit cost.

Upon emergence from bankruptcy, the Successor Company changed its method for recognizing actuarial gains and losses for pension benefits for all benefit plans. With this change, the Successor Company elected to immediately recognize actuarial gains and losses in its operating results in the year in which the gains and losses occur. This accounting method is preferred because the pension assets and liabilities as presented on the Consolidated Balance Sheets fully reflect the impact of all actuarial gains and losses.

The Successor Company also changed the method used to estimate the interest cost component of pension net periodic cost by utilizing a full yield curve approach in the estimation of this component by applying the specific spot rates along the yield curve used in the determination of the benefit obligation of the relevant projected cash flows. This change in estimate is expected to provide a more precise measurement of interest costs by improving the correlation between projected cash flows to the corresponding spot yield curve rates. This change has been accounted for as a change in accounting estimate that is inseparable from a change in accounting principle and has been accounted for prospectively.

26 Holdings Pension Plan with liabilities of $116 million and assets of $78 million. The Company also maintains two non- qualified pension plans for certain executives, the Dex One Pension Benefit Equalization Plan and the SuperMedia Excess Pension Plan. Pension assets related to the Company's qualified pension plans, which are held in master trusts and recorded on the Company's Consolidated Balance Sheet, are valued in accordance with applicable accounting guidance on fair value measurements. All pension plans have been frozen and no employees accrue future pension benefits under any of the pension plans.

Income Taxes

The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, “Income Taxes,” (“ASC 740”).

Deferred tax assets or liabilities are recorded to reflect the expected future tax consequences of temporary differences between the financial reporting basis of assets and liabilities and their tax basis at each year-end. These amounts are adjusted as appropriate to reflect enacted changes in tax rates expected to be in effect when the temporary differences reverse.

The likelihood that deferred tax assets can be recovered must be assessed. If recovery is not likely, the provision for taxes must be increased by recording a reserve in the form of a valuation allowance for deferred tax assets that are estimated not to be ultimately recoverable. In this process, certain relevant criteria are evaluated, including the existence of deferred tax liabilities that can be used to absorb deferred tax assets and taxable income in future years. A valuation allowance is established to offset any deferred income tax assets if, based on the available evidence, it is more likely than not that some or all of the deferred income tax assets will not be realized. The Successor Company has netted deferred tax assets for net operating losses with related uncertain tax positions, if such settlement is required or expected in the event the uncertain tax position is disallowed.

The Successor Company’s policy is to recognize interest and penalties related to unrecognized tax benefits in income tax expense. For additional information regarding the Company's provision (benefit) for income taxes, see Note 13, Income Taxes, to these consolidated financial statements.

Advertising Costs

Advertising costs, which include media, promotional, branding and on-line advertising, are included in selling expense in the Successor Company’s Consolidated Statements of Comprehensive Income (Loss) and are expensed as incurred. Advertising costs for the Successor Company for the year ended December 31, 2017 and the five months ended December 31, 2016 were $2.4 million and $2.3 million, respectively. Advertising costs for the Predecessor Company for the seven months ended July 31, 2016 and the year ended December 31, 2015 were $2.8 million and $3.6 million, respectively.

Capital Stock

Successor Company The Successor Company has authority to issue 300 million shares of capital stock, of which 250 million shares are common stock, with a par of value $.01 per share, and 50 million shares are preferred stock, with a par value of $.01 per share. As of December 31, 2017 and 2016, the Successor Company had 103,196,920 and 99,948,433 shares of common stock outstanding, respectively. The Successor Company has not issued any shares of preferred stock. Each share of common stock comes with one vote with no special preferences provided to any one individual or group of common stock holders. Our stock is closely held by less than 100 stakeholders, is not traded on a public exchange and, at the end of 2016 and 2017, 75% of the shares were controlled by five stakeholders resulting in thin trading. We do not anticipate paying cash dividends or other distributions with respect to our common stock for the foreseeable future.

Stock-Based Compensation

Successor Company

The Successor Company established a stock-based compensation plan, which allows for incentive awards to be granted to designated eligible employees, non-management directors, consultants and independent contractors providing services to the Successor Company. The awards are classified as liability awards based on the criteria established by the applicable accounting rules for stock-based compensation.

27 The Successor Company granted stock options to certain employees and non-management directors during year ended December 31, 2017. The options granted have a contractual term of ten years, with options vesting over a three-year period ending on January 1, 2021.

The Successor Company granted stock options to certain employees and non-management directors during the five months ended December 31, 2016. The options granted have a contractual term of ten years, with options vesting over a three-year period ending on January 1, 2020.

Predecessor Company

The Predecessor Company granted awards to certain employees and certain non-management directors under stock-based compensation plans. The plans provided for several forms of incentive awards to be granted to designated eligible employees, non-management directors, consultants, and independent contractors providing services to the Predecessor Company. The awards were classified as either liability or equity awards based on the criteria established by the applicable accounting rules for stock-based compensation. Stock-based compensation expense related to incentive compensation awards was recognized on a straight-line basis over the minimum service period required for vesting of the award. The Predecessor Company stock- based compensation plans were eliminated upon emergence from bankruptcy because the Predecessor Company's common stock was extinguished. For additional information related to stock-based compensation, see Note 12, Long-Term Incentive Compensation, to these consolidated financial statements.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value.

Level 1 - Valuations based on quoted prices for identical assets and liabilities in active markets;

Level 2 - Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and

Level 3 - Valuations based on unobservable inputs reflecting the Company's assumptions. These valuations require significant judgment.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When there is more than one input at different levels within the hierarchy, the fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Assessment of the significance of a particular input, to the fair value measurement in its entirety, requires substantial judgment and consideration of factors specific to the asset or liability. Assets and liabilities measured at fair value are based on one or more of the following valuation techniques: market approach, income approach or cost approach.

The fair values of cash, trade receivables and accounts payable approximate their carrying amounts due to their short-term nature.

The fair value of our indemnification asset (see Note 2) is measured and recorded onto our Consolidated Balance Sheet using Level 2 inputs. At December 31, 2017, the fair value of this asset was $24.4 million and is included in Other non-current assets.

The fair value of benefit plan assets and the related disclosure are included in Note 11. The fair value of our stock option liability awards are valued using Level 3 inputs as described further in Note 12. The fair value of debt instruments are determined based on the observable market data of a private exchange.

28 The following table sets forth the carrying amount and fair value using Level 2 inputs of the Company’s debt obligations at December 31, 2017 and 2016:

At December 31, 2017 2016 Carrying Carrying Amount Fair Value Amount Fair Value (in thousands) Term loan $ 652,000 $ 667,518 $ 381,287 $ 379,381 Line of credit 160,012 160,012 100,000 100,000 Total debt obligations $ 812,012 $ 827,530 $ 481,287 $ 479,381

Recent Accounting Pronouncements

Recently Adopted Accounting Guidance

In March 2017, the FASB issued ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” (“ASU 2017-07”). ASU 2017-07 requires that an employer disaggregate the service cost component from the other components of net benefit cost, and also provides explicit guidance on how to present the service cost component and other components of net benefit cost in the income statement and allow only the service cost component of net benefit cost to be eligible for capitalization. ASU 2017-07 is effective for nonpublic business entities for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. The Company is not impacted by ASU 2017-07 because the Company has frozen the pension benefits for all plan participants; and therefore, the Company is no longer incurring pension service cost.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” (“ASU 2017-04”). ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. ASU 2017-04 is effective for nonpublic business entities for their annual goodwill impairment tests in fiscal years beginning after December 15, 2021. Early adoption is permitted for interim or annual goodwill impairment test performed on testing dates after January 1, 2017. As permitted under ASU 2017-04, the Company has elected to early adopt this standard for the 2017 goodwill impairment test as of October 1, 2017. We adopted this standard prospectively and it had no impact on the Company's financial statements.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Shared-Based Payment Accounting,” (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liability, and classification of cash flows. The amendments in ASU 2016-09 are effective for nonpublic business entities for fiscal years beginning after December 15, 2017, and for interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company has adopted the provisions of ASU 2016-09 as required and elected to do so prospectively as part of fresh start accounting on July 31, 2016. ASU 2016-09 permits an entity to either estimate forfeitures when calculating stock compensation expense or record the effect of forfeitures as they occur as a cumulative adjustment to stock compensation expense. The Company will record the effect of forfeitures as they occur. We adopted this standard prospectively and it did not have a material impact on the Company's financial statements.

In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes,” (“ASU 2015-17”). ASU 2015-17 requires that deferred tax assets and liabilities be classified as non-current in a classified statement of financial position. The amendments in ASU 2015-17 are effective for fiscal years beginning after December 15, 2016, and for interim periods within those years. Early adoption is permitted. ASU 2015-17 may be either applied prospectively to all deferred tax assets and liabilities or retrospectively to all periods. The Company has adopted the provisions of ASU 2015-17 as required and elected to do so prospectively as part of fresh start accounting on July 31, 2016. As a result, the Company has classified all deferred tax liabilities and assets as non-current on its statements of financial position as of December 31, 2016. We adopted this standard prospectively and it did not have a material impact on the Company's financial statements.

In August 2015, the FASB issued ASU No. 2015-15, “Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” (“ASU 2015-15”). ASU 29 2015-15 permits the deferral and recognition of debt issuance costs as an asset for line-of-credit arrangements. The debt issuance costs are then to be amortized ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of credit arrangement. The Company has adopted the provisions of ASU 2015-15 as required. We adopted this standard prospectively.

In May 2015, the FASB issued ASU No. 2015-08, “Business Combinations (Topic 805): Pushdown Accounting,” (“ASU 2015-08”). ASU 2015-08 amends various SEC paragraphs pursuant to the issuance of Staff Accounting Bulletin No. 115. ASU 2015-08 provides guidance for the measurement of certain transfers between entities under common control in the separate financial statements of each entity. The amendments in ASU 2015-08 became effective immediately. The Company has adopted the provisions of ASU 2015-08 as required. We adopted this standard prospectively and it did not have a material impact on the Company's financial statements.

In May 2015, the FASB issued ASU No. 2015-07, “Fair Value Measurements (Topic 820): Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or Its Equivalent),” (“ASU 2015-07”). ASU 2015-07 removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. ASU 2015-07 also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using the practical expedient. The amendments in ASU 2015-07 are effective for public business entities retrospectively for fiscal years beginning after December 15, 2015, and for interim periods within those years. Early adoption is permitted. As of December 31, 2015, the Company has retrospectively adopted this standard. The fair value hierarchy now excludes certain investments which are valued using Net Asset Value (“NAV”) as a practical expedient.

In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by ASU 2015-03. The amendments in ASU 2015-03 are effective for nonpublic business entities, retrospectively, for fiscal years beginning after December 15, 2015, and for interim periods within fiscal years beginning after December 15, 2016. Early adoption is permitted. The Company has adopted the provisions of ASU 2015-03 as required, effective January 1, 2016. We adopted this standard prospectively.

In January 2015, the FASB issued ASU 2015-01, “Income Statement-Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items,” (“ASU 2015-01”). ASU 2015-01 eliminates from GAAP the concept of extraordinary items. Eliminating the concept of extraordinary items will save time and reduce costs for preparers because they will not have to assess whether a particular event or transaction event is extraordinary, even if they ultimately would conclude it is not. The presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. The amendments in ASU 2015-01 are effective for fiscal years beginning after December 15, 2015, and for interim periods within those fiscal years. A reporting entity also may apply the amendments retrospectively to all periods presented in the financial statements. Early adoption is permitted. The Company has adopted the provisions of ASU 2015-01 as required. We adopted this standard prospectively and it did not have a material impact on the Company's financial statements.

Recent Accounting Guidance Not Yet Adopted

In May 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting,” (“ASU 2017-09”). ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in ASU 2017-09 are effective for all business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted for nonpublic business entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments should be applied prospectively to an award on or after the adoption date. The Company is currently assessing the impact that adopting this new accounting guidance will have on the financial statements and related disclosures.

In February 2017, the FASB issued ASU No. 2017-06, “Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting,” (“ASU 2017-06”). ASU 2017-06 clarifies presentation requirements for a plan's interest in a master trust and requires more detailed disclosures of the plan's interest in the master trust. ASU 2017-06 is effective for all business 30 entities for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing the impact that adopting this new accounting guidance will have on the financial statements and related disclosures.

In November 2016, the FASB issued ASU No. 2016-18, “Restricted Cash,” (“ASU 2016-18”). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. ASU 2016-18 is effective for nonpublic business entities for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company is currently assessing the impact that adopting this new accounting guidance will have on the financial statements and related disclosures.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” (“ASU 2016-15”). ASU 2016-15 provides guidance on eight specific cash flow classification issues in the statement of cash flows under Topic 230. ASU 2016-15 is effective for nonpublic business entities for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company is currently assessing the impact that adopting this new accounting guidance will have on the financial statements and related disclosures.

In May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow Scope Improvements and Practical Expedients,” (“ASU 2016-12”). ASU 2016-12 provides clarification and practical expedient to a narrow-scope of aspects in Topic 606. ASU 2016-12 is effective for nonpublic business entities for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. Early application is permitted for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently assessing the impact that adopting this new accounting guidance will have on the financial statements and related disclosures.

In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” (“ASU 2016-10”). ASU 2016-10 clarifies the implementation guidance in Topic 606 “Revenue from Contracts with Customers” regarding identifying performance obligations and licensing. ASU 2016-10 is effective for nonpublic business entities for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. Early application is permitted for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently assessing the impact that adopting this new accounting guidance will have on the financial statements and related disclosures.

In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross verses Net),” (“ASU 2016-08”). ASU 2016-08 clarifies the implementation guidance in Topic 606 “Revenue from Contracts with Customers” regarding principal verses agent considerations. ASU 2016-08 is effective for nonpublic business entities for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. Early application is permitted for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently assessing the impact that adopting this new accounting guidance will have on the financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” (“ASU 2016-02”). ASU 2016-02 requires lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as either a financing or operating lease. The amendments also require certain quantitative and qualitative disclosures. The amendments in ASU 2016-02 are effective for nonpublic business entities for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently assessing the impact that adopting this new accounting guidance will have on the financial statements and related disclosures.

In April 2015, the FASB issued ASU No. 2015-04, “Compensation - Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer's Defined Benefit Obligation and Plan Assets,” (“ASU 2015-04”). ASU 2015-04 provides the use of a practical expedient that permits the entity to measure defined benefit plans assets and obligations using the month-end that is closest to the entity's fiscal year-end and apply that practical expedient consistently from year to year. Further, if a contribution or significant event occurs between the month-end date used to measure defined benefit plan asset and obligations and an entity's fiscal year-end, the entity should adjust the measurement of defined plan assets and obligations to reflect those contributions or significant events. However, an entity should not adjust the measurement of defined benefit plan asset and obligations for other events that occur between the month-end measurement and the entity's fiscal year-end 31 that are not caused by the entity. The amendments in ASU 2015-04 are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted. The Company does not anticipate that the adoption of this standard will have a material impact on the financial statements.

Note 2 Acquisition of YP Holdings

On June 30, 2017 (the “Acquisition Date”), the Company completed the acquisition of YP, a leading marketing solutions and search platform provider and publisher of the Real Yellow Pages and YP.com. The Company acquired substantially all of the assets and assumed substantially all of the liabilities, in each case, other than certain specified assets and liabilities. The newly formed Company began doing business as DexYP and is led by the Company’s current board of directors and executive management team. We accounted for the business combination using the acquisition method of accounting in accordance with ASC 805, “Business Combinations.”

In connection with the acquisition, consideration paid by the Company included $600.7 million in cash and 3,248,487 shares of the Company’s common stock, with a fair value of $18.2 million. The equity value of the shares issued was calculated using the income approach. Specifically, the discounted cash flow method was utilized to determine the equity value. Closing costs, including finance and legal advisory fees, debt issuance costs, and insurance were $15.0 million.

To finance the acquisition, the Company amended its Dex Media Credit Agreement to issue an additional $550.0 million under its term loan. In addition, the Company amended its revolving line of credit facility, increasing its line of credit from $200.0 million to $350.0 million using the acquired YP billed and unbilled accounts receivable as collateral. On June 30, 2017, the Company borrowed an additional $70.7 million under the line of credit to help finance the acquisition. The Company incurred no debt issuance costs for the additional $550.0 million term loan and $3.9 million of debt issuance costs for the additional $150.0 million revolving line of credit. The debt issuance costs for the revolving line of credit were recorded as an asset and will be amortized ratably over the term of revolving credit agreement.

The acquisition of YP was accounted for using the purchase method of accounting for business combinations and, accordingly, the assets acquired and liabilities assumed, including an allocation of purchase price and the results of operations of YP, including the amortization of acquired intangible assets, have been included in the Company's consolidated financial statements since the date of acquisition, which for 2017 included $439.8 million of revenue and ($28.0) million of net (loss).

The Company determined, using Level 3 inputs, the fair value of certain assets and liabilities including fixed assets and capitalized software, intangible assets, and financing debt by applying a combination of the income approach, the market approach, and the cost approach. Specific to intangible assets, client relationships were valued using a combination of the income and excess earnings approach, whereas patented technologies and trademarks and domain names were valued using a relief of royalty method. At the Acquisition Date, the purchase price is preliminarily assigned to the acquired assets and assumed liabilities as follows:

32 (in thousands) Total cash consideration $ 600,699 Total share consideration 18,173 Total purchase consideration, as allocated below: $ 618,872

Cash $ 12,965 Accounts receivable and other current assets 334,275 Fixed assets and capitalized software 135,479 Intangible assets: Client relationships (useful life of 3.5 years) 193,100 Patented technologies (useful life of 2.5 years) 7,500 Trademarks and domain names (useful life of 3.5 years) 62,900 Other non-current assets 19,182 Accounts payable and other current liabilities (228,501) Financing debt obligations including current portion (67,532) Employee benefit obligations (38,140) Other liabilities (95,820) Total identifiable net assets $ 335,408 Goodwill 283,464 Total net assets acquired $ 618,872

The excess of the purchase price over the fair value of the net identifiable assets acquired and liabilities assumed was allocated to goodwill. Total goodwill of $283.5 million is not expected to be deductible for tax purposes, is not being amortized and is subject to an annual impairment test using a fair-value-based approach.

The provisional purchase price allocation presented above is based upon all information available to the Company at the present time and is based upon management’s preliminary estimates of the fair values. The purchase price allocation is provisional pending the final determination of the fair values of the assets and liabilities, which the Company expects will occur within twelve months following the acquisition. This will require the completion of certain business integration activities as well as a fair value determination of acquired litigation matters, including those subsequently settled as part of the Company’s assessment of all pending litigation. Upon the completion of the final purchase price allocation, any reallocation of fair values to the assets acquired and liabilities assumed in the acquisition could have a material impact on the Company's depreciation and amortization expenses and future results of operations.

The seller provided the Company indemnity for future potential losses relating to uncertain tax positions (“UTPs”). The UTPs include U.S. federal and state income taxes relating to the pre-closing tax period that could result from a disallowance of certain credits, deductions, or apportionment items. Given that the UTPs represent a liability of the acquired entity which is subject to indemnification, the initial purchase price allocation reflects the assignment of a $48.0 million liability associated with this UTP. The indemnity covers potential losses at an amount equal to the lesser of the UTP liability or the current fair value of the 3,248,487 shares of the Company's common stock issued to the Seller as part of the purchase consideration ("the Shares"). At the Acquisition Date, fair value of the Shares was $18.2 million. Accordingly, the Company's initial purchase price allocation includes an indemnification asset based on the fair value of the Shares.

In connection with the acquisition, the Company recorded $47.8 million of deferred tax liabilities net of deferred tax assets. The deferred tax liabilities were recorded related to basis differences in partnership interests. The deferred tax liabilities are reduced by deferred tax assets, including net operating losses as of the date of the acquisition after consideration of limitations on the use under U.S. Internal Revenue Code section 382.

The Company is amortizing the identifiable intangible assets acquired using a pattern in which the economic benefit of the assets is expected to be realized by the Company over their estimated remaining useful lives. There are no residual values for any of the identifiable intangible assets subject to amortization acquired during the YP acquisition. Intangible assets primarily consist of client relationships of $193.1 million, patented technologies of $7.5 million and trademarks and domain names of $62.9 million with estimated remaining useful lives of 3.5 years, 2.5 years and 3.5 years, respectively.

33 Pro Forma Information

The unaudited pro forma information below presents the operating results of the combined Company, with results prior to the Acquisition Date adjusted as if the Acquisition had occurred January 1, 2016. Accordingly, the 2017 and 2016 pro forma results reflect the operating results of YP from January 1, 2016 through December 31, 2017.

The unaudited pro forma information is not necessarily indicative of the consolidated results of operations that would have been realized had the Acquisition been completed as of the beginning of 2016, nor is it meant to be indicative of future results of operations that the combined entity will experience:

Year Ended December 31, 2017 ( in thousands) YP Results Six months Ended Non-GAAP GAAP Results June 30, 2017 Proforma Operating Revenue $ 1,318.2 $ 686.3 $ 2,004.5 Net (Loss) $ (171.3) $ (25.9) $ (197.2)

Year Ended December 31, 2016 (in thousands) YP Results Year Ended Non-GAAP GAAP Results December 31, 2016 Proforma Operating Revenue $ 943.0 $ 1,610.4 $ 2,553.4 Net Income $ 674.1 $ 87.4 $ 761.5

These pro forma results of operations include adjustments to the historical financial statements of the combined companies and have been prepared for comparative purposes only. These pro forma results do not purport to be indicative of the results of operations which actually would have resulted had the acquisition occurred on the date indicated or which may result in the future.

Note 3 Emergence from Chapter 11

Background

On July 15, 2016, a Confirmation Hearing was held, at which time, the Plan was confirmed. On July 29, 2016, the Bankruptcy Court finalized the bankruptcy proceeding and the Company successfully emerged from bankruptcy.

Fresh Start Accounting

The Company adopted fresh start accounting and reporting effective July 31, 2016 in accordance with ASC 852. The Company applied, as allowed under GAAP, the provisions of fresh start reporting to its financial statements, as the holders of existing voting shares of the Predecessor Company received less than 50% of the voting shares of the emerging entity and the reorganization value of the Predecessor Company’s assets immediately before the date of the confirmation was less than the post-petition liabilities and allowed claims. The consolidated financial statements for the periods prior to July 31, 2016 do not include the effect of any changes in the Company’s capital structure or changes in the fair value of assets and liabilities as a result of fresh start accounting. The results of operations for the Predecessor Company for the seven months ended July 31, 2016 includes a pre-tax, net gain of $1,844.0 million for reorganization items, including a pre-emergence gain of $630.2 million from the discharge of liabilities under the plan and a gain of $1,299.9 million associated with fresh start adjustments, offset by a charge of $86.1 million recorded as reorganization items resulting from certain costs and expenses relating to the Plan becoming effective.

34 As confirmed by the Bankruptcy Court, the enterprise value attributed to Dex Media was estimated to be in the range between $1,450.0 million to $1,650.0 million. The final enterprise value was determined to be $1,585.0 million, of which debt was valued at $600.0 million and equity valued at $985.0 million. Dex Media’s valuation is based upon three principal methodologies: (i) a calculation of the present value of the unlevered free cash flows reflected in Dex Media’s projections, including calculating the terminal value of the business based upon a range of perpetuity growth rates and weighted-average cost of capital; (ii) a comparison of financial data of Dex Media with similar data for other companies in businesses similar to Dex Media; and (iii) an analysis of comparable valuations indicated by precedent mergers and acquisitions of such companies.

The basis for the discounted cash flows was the projections presented in the bankruptcy disclosure statement. The discounted cash flow analysis used the projected estimated debt-free, after tax free cash flows through December 31, 2020. These cash flows were then discounted at a range of estimated weighted-average cost of capital of 11% - 13% (the discount rate) for the reorganized Company. The discount rate reflects the estimated blended rate of return that would be expected by the debt and equity investors to invest in the reorganized Company based on its target capital structure. The Company calculated the cost of equity based on a capital asset pricing model, which assumes that the expected equity return is a function of the risk free rate and a correlation of a publicly traded stock’s performance to the return on the broader market, and an adjustment related to the estimated equity market capitalization of the reorganized Company, which reflects the historical equity returns of small, medium, and large equity market capitalization companies that were not accounted for by the capital asset pricing model. The enterprise value was determined by calculating the present value of the reorganized Company’s unlevered after tax free cash flows based on the projections plus an estimate for the value of the reorganized Company beyond the projection period (the terminal value). The Company utilized the perpetuity growth method to derive the terminal value of the reorganized Company. For purposes of the analysis, the Company assumed a terminal growth rate of -1.5% to 1.5%.

The Company also utilized a comparable companies methodology which involved identifying a group of publicly traded companies whose businesses have operating and financial characteristics that are comparable in certain respects to those of Dex Media and then calculating ratios of value to earnings before income taxes, depreciation and amortization (“EBITDA”) of these companies based upon the public market value of such companies’ securities. Criteria for selecting comparable companies include, among other relevant characteristics, similar lines of business, business risks, growth prospects, business maturity, market presence, and size and scale of operations. The ranges of ratios derived were then applied to Dex Media’s projected financial results to derive an implied enterprise value of the reorganized Company. The selected range of ratios was 3.5 to 4.5 times EBITDA.

Additionally, the Company utilized a precedent, selected transaction analysis, which estimates value by examining public merger and acquisition transactions. The valuations paid in such acquisitions or implied in such mergers were analyzed as ratios of various financial results. These transaction multiples are calculated based on the purchase price (including any debt assumed) paid to acquire companies that had operating and financial characteristics comparable in certain respects to Dex Media. Dex Media also observed historical expected synergies and enterprise premiums paid in selected transactions.

The enterprise value attributed to the Company of $1,585.0 million plus liabilities, excluding debt obligations, was allocated to the various tangible and intangible assets. The significant assumptions, utilizing Level 3 inputs, related to the valuations of assets in connection with fresh start accounting included the following:

Accounts Receivable and Unbilled Accounts Receivable - The accounts receivable and unbilled accounts receivable were valued at fair value using the net realizable value approach. The net realizable value approach is determined by reducing the gross receivable balance for expected bad debt and sales allowance adjustments. Due to the relatively short collection period, the net realizable value approach was determined to result in a reasonable indication of fair value of the assets.

Fixed Assets and Capitalized Software - In general, the Company’s book value of its fixed assets and capitalized software reflect their fair value. The Company is not capital intensive, consisting primarily of computer and data processing equipment, and its fixed assets and capitalized software have relatively short lives. The Company performed a third-party valuation of its owned land and buildings and increased the value of its owned properties by $7.1 million.

Intangible Assets - The financial information used to determine the fair value of intangible assets, using Level 3 inputs, was consistent with the information used in estimating the enterprise value attributed to Dex Media. The following is a summary of the methodology used in the valuation of each category of intangible assets:

Client Relationships - The Company has developed significant client relationships over the years. These relationships provide ongoing and repeat business for the Company and represent a valuable asset. To estimate the fair value of existing customer relationships, the Company utilized a variation of the income approach called the excess earnings method. 35 Given the direct contribution made by the client relationships to the financial performance of the business, the excess earnings methodology was determined to be the best method to estimate fair value. The excess earnings method estimates fair value based on the earnings and/or cash flow capacity of an asset.

Trademarks and Domain Names - An income approach known as the Relief from Royalty (“RFR”) methodology was used to establish the fair value of trademarks and domain names. In using this method, a sample of comparable guidelines, arm’s length royalty or license agreements were analyzed. Significant assumptions utilized were forecasted revenue streams, estimated applicable royalty rates, applicable income tax rates and appropriate discount rates.

Patented Technology - The Company utilized the RFR methodology to establish the fair value of patented technology. Under the RFR methodology, the asset is valued by reference to the amount of royalty income it could generate if it were licensed, in an arm’s length transaction, to a third party. Significant assumptions utilized were the useful lives, the forecasted revenue streams, estimated applicable royalty rates, applicable income tax rates and appropriate discount rates.

Intangible assets valued in connection with fresh start accounting includes adjustments of $374.0 million. The following table sets forth the Company's intangible assets by type:

(in thousands) Client relationships $ 508,000 Trademarks and domain names 137,400 Patented technologies 12,100 Total intangible assets $ 657,500

The adjustments presented below were made to the July 31, 2016 Consolidated Balance Sheet. The Consolidated Balance Sheet reorganization and fresh start adjustments presented below summarize the impact of the adoption of the Plan and reflects the fresh start accounting entries as of the Convenience Date:

36 At July 31, 2016 Predecessor Reorganization Fresh Start Successor Company Adjustments Adjustments Company (in thousands) Assets Current assets: Cash and cash equivalents $ 107,596 $ (11,075) (2) $ — $ 96,521 Accounts receivable 144,053 — — 144,053 Unbilled accounts receivable 126 — 292,339 (5) 292,465 Accrued taxes receivable 1,350 — — 1,350 Deferred directory costs 107,193 — (91,861) (6) 15,332 Deferred tax assets 14,317 (9,766) (4,551) (4) — Prepaid expenses and other 18,388 (970) (3) (4,974) (4) 12,444 Total current assets 393,023 (21,811) 190,953 562,165 Fixed assets and capitalized software 276,571 — (241,775) (7) 34,796 Less: accumulated depreciation 248,881 — (248,881) (7) — Fixed assets and capitalized software, net 27,690 — 7,106 34,796 Goodwill 315,041 — 723,747 (4) 1,038,788 Intangible assets, net 283,532 — 373,968 (8) 657,500 Pension assets 41,063 — (3,316) (9) 37,747 Non-current deferred tax assets 31,812 (18,872) (12,940) — Other non-current assets 4,588 (663) — 3,925 Total assets $ 1,096,749 $ (41,346) $ 1,279,518 $ 2,334,921

Liabilities and Shareholders' Equity (Deficit) Current liabilities: Accounts payable and accrued liabilities $ 100,043 $ 53,776 (3), (10) $ 151 (4) $ 153,970 Deferred revenue 81,048 — (81,048) (6) — Current deferred income taxes 351 76,301 (76,652) — Total current liabilities 181,442 130,077 (157,549) 153,970 Long-term debt — 600,000 (3) — 600,000 Employee benefit obligations 111,082 — 9,515 (9) 120,597 Deferred tax liabilities 40,613 54,057 339,206 (4) 433,876 Unrecognized tax benefits 7,248 — — 7,248 Other liabilities 341 33,889 (3) 34,230 Liabilities subject to compromise 2,315,525 (1) (2,315,525) (3) — — Shareholders' equity (deficit): Common stock 17 999 (17) 999 Predecessor Company additional paid - in capital 1,556,876 — (1,556,876) (3) — Successor Company additional paid - in capital — 984,001 — 984,001 Retained earnings (deficit) (3,039,906) 471,156 (3) 2,568,750 (4) — Accumulated other comprehensive (loss) (76,489) — 76,489 (4) — Total shareholders' equity (deficit) (1,559,502) 1,456,156 1,088,346 985,000 Total liabilities and shareholders' equity (deficit) $ 1,096,749 $ (41,346) $ 1,279,518 $ 2,334,921

37 Explanatory notes (in thousands of dollars, except shares):

(1) Liabilities subject to compromise

Debt obligations $ 2,280,107 Accrued interest 35,094 Value creation program 324 $ 2,315,525 (2) Total cash disbursed at emergence date In accordance with the Plan, Dex Media disbursed to its allowed unsecured claim holders cash representing partial payment of principal and interest on pre-emergence debt and paid certain fees.

Payments to allowed unsecured claim holders $ 5,000 Cash fees 6,075 $ 11,075

(3) Settlement of liabilities subject to compromise In the settlement of liabilities subject to compromise, Dex Media issued new common stock, debt, and recorded an accrued liability of $53.8 million to the secured debt holders. In addition, the Company provided a cash payment of $5.0 million and stock warrants to the unsecured holders. In the extinguishment of liabilities, the Company recorded a gain of $630.2 million on its Consolidated Statement of Comprehensive Income (Loss) for the seven months ending July 31, 2016.

Liabilities subject to compromise $ 2,315,525 Less: Cash payment to allowed unsecured claim holders (5,000) Fair value of stock warrants issued to unsecured claim holders (33,889) Accrued liabilities to allowed secured claim holders (53,776) New common stock and additional paid-in capital issued to satisfy allowed and disputed claims (985,000) New debt issued to satisfy allowed and disputed claims (600,000) Other adjustments (7,706) Gain on settlement of liabilities subject to compromise $ 630,154

Impact of reorganization adjustments on retained earnings (deficit):

Reorganization adjustments: Predecessor Company debt and related accrued interest $ 2,222,537 Predecessor Company value creation program 324 Successor Company term loan (600,000) Successor Company common stock and additional paid-in capital (985,000) Other charges (7,707) Gain on settlement of liabilities subject to compromise 630,154 Tax expense (158,998) Total impact on retained earnings (deficit) for reorganization adjustments $ 471,156

38 (4) Reconciliation of the value attributed to Dex Media assets, determination of the total value to be allocated to assets, and the determination of goodwill:

Enterprise value $ 1,585,000 Plus: liabilities (excluding term loan fair value of $600.0 million) 748,467 Reorganization value 2,333,467 Less: fair value assigned to tangible and intangible assets (1,294,679) Value of Dex Media assets in excess of fair value (goodwill) $ 1,038,788

Reorganization value $ 2,333,467 Less: term loan fair value (600,000) Less: other liabilities (excluding term loan) (748,467) New common stock ($0.01 at par value) and paid-in capital $ 985,000 Common shares outstanding at July 31, 2016 99,948,433

The following table summarizes the allocation of fair values of the assets and liabilities, at emergence, as shown in the reorganized Consolidated Balance Sheet as of July 31, 2016:

Cash and cash equivalents $ 96,521 Other current assets 464,190 Fixed assets and capitalized software, net 34,796 Goodwill 1,038,788 Intangible assets, net 657,500 Other non-current assets 41,672 Total assets 2,333,467 Less: current liabilities (152,516) Less: term loan fair value (600,000) Less: other liabilities (595,951) Net assets $ 985,000

Impact of fresh start adjustments on retained earnings (deficit):

Fresh start accounting adjustments: Adjustment to goodwill $ 723,747 Write-off of deferred revenue and deferred directory costs 299,650 Adjustment to intangible assets 373,968 Adjustment to accumulated other comprehensive income (loss) (82,070) Write-off of term loan debt issuance costs (4,974) Other fresh start accounting adjustments (10,399) Impact of fresh start accounting on statement of operations 1,299,922 Adjustments to tax expense (288,065) Elimination of Predecessor Company common stock and additional paid-in capital 1,556,893 Total impact on retained earnings (deficit) for fresh start accounting adjustments $ 2,568,750

39 Write-off of Predecessor Company accumulated other comprehensive (loss):

Balance of Predecessor Company accumulated other comprehensive (loss) before adjustments $ (76,489) Fresh start pension remeasurement adjustment (8,317) Elimination of Predecessor Company's accumulated other comprehensive (loss) (84,806) Adjustment against deferred tax liabilities 2,736 Fresh start write-off of remaining balance against net income 82,070 Balance, Predecessor Company $ —

(5) In connection with the Company's adoption of fresh start accounting, the fair value of unbilled accounts receivable was determined to be $292.5 million. Unbilled accounts receivable represents amounts not billable at the balance sheet date, but are billed over the remaining life of the client's advertising contracts.

(6) In connection with the Company's adoption of fresh start accounting, the fair value of deferred directory costs and deferred revenue were determined to have no value. The deferred directory costs as of July 31, 2016 do not have any future value since the Company has already incurred the costs to produce the clients' advertising and does not expect to incur additional costs associated with those published directories. As a result, deferred directory costs of approximately $91.9 million will not be recognized by the Successor Company, which would have otherwise been recorded by the Predecessor Company. The remaining amount of $15.3 million in the Successor Company's deferred directory costs represents deferred costs associated with future publications. Similarly, the Company does not have any remaining performance obligations related to a majority of its customers who have previously contracted for advertising. As a result, approximately $391.5 million of deferred revenue will not be recognized by the Successor Company, which would have otherwise been recorded by the Predecessor Company.

(7) As a result of the Company's adoption of fresh start accounting on July 31, 2016, fixed assets and capitalized software has been stated at fair value. As such, the balance in accumulated depreciation was reduced to zero.

(8) Intangible assets valued in connection with fresh start accounting include adjustments to increase client relationships by $465.8 million and trademarks and domain names by $73.3 million. Intangible assets associated with the Predecessor Company related to directory service agreements and advertising commitments were written off to zero. The fair value determination resulted in a $374.0 million net increase for intangible assets on the Company's Consolidated Balance Sheet at July 31, 2016.

(9) In connection with the Company's adoption of fresh start accounting, the net employee benefit plans liability balance was increased by $9.5 million, while net pension assets were decreased by $3.3 million.

(10) As a result of the Company's adoption of fresh start accounting on July 31, 2016, long-term debt was restated at its fair value of $600.0 million.

Impact of Reorganization Items and Fresh Start Accounting Adjustments

Consolidated Statement of Comprehensive Income (Loss) During the Seven Months Ended July 31, 2016

As a result of the bankruptcy filing, the Predecessor Company recorded reorganization items, in accordance with provisions established by the applicable reorganization accounting rules in accordance with ASC 852. Reorganization items represent charges that are directly associated with the process of reorganizing the business under Chapter 11 of the Bankruptcy Code, and may include certain expenses (including professional services fees), realized gains and losses, and provisions for losses resulting from the reorganization.

The Predecessor Company recorded reorganization items and fresh start adjustments of $1,844.0 million during the seven months ended July 31, 2016. The following table sets forth the components of the Predecessor Company's reorganization and fresh start items for the seven months ended July 31, 2016:

40 Predecessor Company Seven Months Ended July 31, 2016 (in thousands) Gain on settlement of liabilities subject to compromise $ 630,154 Adjustment to goodwill 723,747 Write-off of deferred revenue and deferred directory costs 299,650 Adjustment to intangible assets 373,968 Adjustment to accumulated other comprehensive income (loss) (82,070) Other fresh start accounting adjustments (15,373) Write-off of unamortized fair value adjustments associated with debt obligations (75,935) Write-off of debt issuance costs (1,166) Professional advisory fees (8,984) Total reorganization items and fresh start adjustments, net $ 1,843,991

Note 4 Goodwill, Intangible Assets and Impairment

Goodwill

The Successor Company had goodwill of $609.5 million and $326.0 million as of December 31, 2017 and 2016, respectively, which is partially deductible for tax purposes. With the closing of the acquisition of YP on June 30, 2017, the Company recorded $283.5 million for the excess of the purchase price over the fair value of the net identifiable assets acquired and liabilities assumed (see Note 2, Acquisition of YP Holdings, to these consolidated financial statements for further information).

The Successor Company performed their annual impairment review as of October 1, 2017 under the provisions of ASU 2017-04. The estimated fair value of goodwill was determined using many critical factors, including projected future operating cash flows, revenue and market growth, market multiples, discount rates, and consideration of market valuations of comparable companies. The estimated fair values of other intangible assets subject to the annual impairment review are calculated based on projected future discounted cash flow analysis. The development of estimated fair values requires the use of assumptions, including assumptions, using Level 3 inputs, regarding revenue and market growth as well as specific economic factors. These assumptions reflect best estimates, but these items involve inherent uncertainties based on outside market conditions.

The Company performed a quantitative analysis as of October 1, 2017, and the estimated fair value of the Company’s single reporting unit exceeded the carrying value. The calculated fair value was determined using the discounted cash flow method. Estimates of fair value are subjective in nature, involve uncertainties and matters of significant judgment and are made at a specific point in time. Thus, changes in key assumptions from period to period could significantly affect the estimate of fair value. Significant assumptions used in the fair value estimate include projected revenues and related growth rates over time, projected operating cash flow margins, estimated tax rates, depreciation expense, capital expenditures, required working capital needs, and an appropriate risk-adjusted weighted-average cost of capital (for 2017, the weighted average cost of capital used was 19.5%).

Upon emergence from bankruptcy, on July 31, 2016, the Successor Company recorded $1,038.8 million of goodwill related to the adoption of fresh start accounting (see Note 3, Emergence from Chapter 11, to these consolidated financial statements for further information). Due to a reduction in stock prices in the fourth quarter of 2016 and the development of new cash flow forecasts, the Successor Company decided to test for impairment of goodwill at year-end. As of December 31, 2016, the Company had one reporting unit. It was determined that the carrying value of the reporting unit, including goodwill, exceeded the fair value of the reporting unit, requiring the Successor Company to perform step two of the goodwill impairment test to determine the amount of impairment loss, if any. Step two of the goodwill impairment test requires that the Company estimate an implied fair value of goodwill and compare it to the carrying amount of goodwill. If the carrying amount of goodwill exceeds its implied fair value, then an impairment loss shall be recognized for the difference. This test resulted in a goodwill impairment charge of $712.8 million, which was recognized in the Successor Company’s Consolidated Statement of Comprehensive Income (Loss) for the five months ended December 31, 2016.

41 In performing step one of the impairment test at each measurement date, the Company estimated the fair value of the reporting unit using Level 3 inputs and a combination of the income and market approaches, with equal emphasis placed on each, for purposes of estimating the total enterprise value of the Company.

The income approach was based on a discounted cash flow analysis and calculated the fair value by estimating the after-tax cash flows attributable to the Company and then discounting the after-tax cash flows to a present value, using the weighted- average cost of capital (“WACC”). The WACC, which was 19.5% for 2017, is an estimate of the overall after-tax rate of return required for equity and debt holders of a business enterprise using a target capital structure mix of debt and equity. The Company's cost of equity and debt was developed based on data and factors relevant to the economy, the industry and the Company. The cost of equity was estimated using the capital asset pricing model (“CAPM”). The CAPM uses a risk-free rate of return and an appropriate market risk premium for equity investments and the Company's specific risk. The cost of debt was estimated using the current after-tax average borrowing cost that a market participant would expect to pay to obtain its debt financing assuming the target capital structure.

To determine the fair value of the reporting unit based on the market approach, the Successor Company utilized the prior stock transaction method which estimates the enterprise fair value based on recent trades of the Company’s common stock. The Company’s stock trades in the fourth quarter of 2016 were valued based on the number of shares traded multiplied by the price of the stock on the date of each transaction. A total weighted- average stock price was calculated based on the total value of the stock transactions divided by the total number of shares traded. The Company then computed the total equity value of the Company, by multiplying the weighted-average stock price times the total outstanding shares of common stock and adding a premium for control and marketability. The control premium was derived from precedent transactions in the same industry and the marketability premium was included due to the illiquid market for the Company’s common stock. The fair value of the Company’s debt was then added to the total equity value including the premium for control and marketability to arrive at an overall enterprise fair value.

The fair value estimates used in the goodwill impairment analysis required significant judgment. Accordingly, the Successor Company’s fair value estimates for purposes of assessing goodwill for impairment are considered Level 3 fair value measurements. The Company based fair value estimates on assumptions of future revenues and operating margins and assumptions about the overall economic climate and the competitive environment of the Company's business. Current estimates assume revenue will decline into the foreseeable future. Due to the number and sensitivity of estimates and assumptions, there can be no assurances that the estimates and assumptions will prove to be accurate predictions of the future. If estimates and assumptions regarding business plans, competitive environments, or anticipated operating results are not correct, the Company may be required to record additional goodwill impairment charges in the future.

The following table sets forth the components of goodwill and accumulated impairment losses for the Successor Company for the year ended December 31, 2017 and the five months ended December 31, 2016 and for the Predecessor Company for the seven months ended July 31, 2016 and the year ended December 31, 2015:

42 Accumulated Goodwill Impairment Goodwill Gross Losses Net (in thousands) Predecessor Company Ending balance at December 31, 2015 $ 389,041 $ (74,000) $ 315,041 Additions — — — Impairments — — — Ending balance at July 31, 2016 $ 389,041 $ (74,000) $ 315,041

Successor Company Beginning balance at August 1, 2016 (fresh start) $ 1,038,788 $ — $ 1,038,788 Additions — — — Impairments — (712,795) (712,795) Ending balance at December 31, 2016 $ 1,038,788 $ (712,795) $ 325,993 Additions 283,464 — 283,464 Impairments — — — Ending balance at December 31, 2017 $ 1,322,252 $ (712,795) $ 609,457

Intangible Assets

The Successor Company had definite-lived intangible assets of $532.4 million and $537.0 million as of December 31, 2017 and 2016, respectively.

Intangible assets are recorded separately from goodwill if they meet certain criteria. The Successor Company reviews its definite-lived intangible assets whenever events or circumstances indicate that their carrying value may not be recoverable. The Successor Company evaluated its definite-lived assets for potential impairment and determined they were not impaired as of December 31, 2017 and 2016.

The Successor Company amortizes its intangible assets using the income forecast method, which is an accelerated amortization method that assumes the remaining value of the intangible assets is greater in the earlier years and then steadily declines over time based on expected future cash flows. The Successor Company evaluated the estimated remaining useful lives of its intangible assets as of December 31, 2017 and 2016 and concluded that the estimated remaining lives were appropriate.

Amortization expense for intangible assets for the year ended December 31, 2017, the five months Successor period ended December 31, 2016, the seven months Predecessor period ended July 31, 2016, and the year ended December 31, 2015 was $268.1 million, $120.5 million, $138.1 million, and $372.7 million, respectively. The Successor Company's annual amortization expense for intangible assets is estimated to be $220.7 million in 2018, $165.7 million in 2019, $114.8 million in 2020, $16.3 million in 2021 and $14.5 million in 2022.

The following table sets forth the details of the Successor Company's intangible assets at December 31, 2017 and 2016: Successor Company At December 31, 2017 At December 31, 2016 Accumulated Accumulated Gross Amortization Net Gross Amortization Net (in thousands) Client relationships $ 701,100 $ 320,027 $ 381,073 $508,000 $ 103,478 $ 404,522 Trademarks and domain names 200,300 58,804 141,496 137,400 14,420 122,980 Patented technologies 19,600 9,775 9,825 12,100 2,614 9,486 Total intangible assets $ 921,000 $ 388,606 $ 532,394 $657,500 $ 120,512 $ 536,988

43 The following table rolls forward the balances of intangible assets of the Successor Company for the year ended December 31, 2017 and for the five months ended December 31, 2016 and for the Predecessor Company for the seven months ended July 31, 2016 and for the year ended December 31, 2015:

Directory Trademarks Total service Client and domain Patented Advertising Intangible agreements relationships names technologies commitment Assets (in thousands) Predecessor Company Balance, December 31, 2015 $ 218,356 $ 101,199 $ 84,637 $ 16,105 $ 1,325 $ 421,622 Amortization expense (53,091) (59,033) (20,496) (4,697) (773) (138,090) Balance, July 31, 2016 $ 165,265 $ 42,166 $ 64,141 $ 11,408 $ 552 $ 283,532

Successor Company Beginning balance at August 1, 2016 (fresh start) $ — $ 508,000 $ 137,400 $ 12,100 $ — $ 657,500 Amortization expense — (103,478) (14,420) (2,614) — (120,512) Balance, December 31, 2016 — 404,522 122,980 9,486 — 536,988 Additions from Business Combination — 193,100 62,900 7,500 — 263,500 Amortization expense — (216,549) (44,384) (7,161) — (268,094) Balance, December 31, 2017 $ — $ 381,073 $ 141,496 $ 9,825 $ — $ 532,394

Note 5 Stock Warrants

As required by the bankruptcy plan of reorganization, the Company issued 11,111,112 stock warrants as partial settlement of the claim for the senior subordinated notes with the unsecured lenders. These warrants had a strike price of $13.76 as of July 31, 2016 and were fully exercisable on this date; however, the strike price was subject to adjustment based on the final cash distributions made to the term loan lenders. Until the strike price was finalized, the value of the warrants could not be directly indexed to the Company’s stock price; and therefore, the warrants were classified as a liability rather than an equity instrument. Once the strike price was finalized on November 17, 2016, the warrants were classified as an equity instrument.

In accordance with ASC 820, “Fair Value Measurements and Disclosures,” the stock warrants are to be recorded at their fair value on the Company’s Consolidated Balance Sheets. The Company utilized the Black-Scholes option pricing model to estimate the fair value of the stock warrants. The model incorporates assumptions including the valuation date, exercise price, value of the underlying stock, expected term, expected volatility, dividend yield, and risk-free rate of return. The Black-Scholes model was developed to estimate the fair value of exchange traded options for public companies. Since the Company is private and its common stock is not traded on an open exchange, the study incorporated a discount for lack of marketability ("DLOM") due to the illiquid market for the Company’s common stock.

Upon emergence from bankruptcy on July 31, 2016, the Successor Company recorded a stock warrant liability of $33.9 million as required by fresh start accounting, with an initial strike price of $13.76. On November 17, 2016, the warrant strike price was recalculated to be $13.55 based on the final cash distributions made to the term loan lenders. Since the final warrant strike price was established, the value of the warrants could now be directly indexed to the Company’s stock price and should be recorded as an equity instrument.

At December 31, 2016, the fair value of the warrants was estimated to be $4.2 million and was recorded to equity as additional paid-in capital. The revaluation and subsequent reclassification of the warrants fair value from a liability to equity resulted in a gain of $29.7 million, which is included in net (loss) of the Successor Company for the five months ended December 31, 2016. The fair value was estimated using the final strike price of $13.55 and a stock price of $2.38 as inputs into the Black-Scholes model. The $2.38 stock price was based on the weighted-average stock trades in the fourth quarter of 2016.

The fair value of the stock warrants is estimated using the Black-Scholes option pricing model. The model incorporates assumptions regarding inputs as follows:

44 • Expected volatility is based on the debt-leveraged historical volatility of the Successor Company's peer companies; • Expected life is calculated based on the remaining contractual term of the warrants; and • The risk-free interest rate is determined using the U.S. Treasury zero-coupon issue with a remaining contractual term equal to the expected life of the warrants.

Weighted-average stock warrant fair values and assumptions for the five months ended December 31, 2016 are disclosed in the following table:

Successor Company Five Months Ended December 31, 2016 Weighted-average fair value $ 0.38 Dividend yield —% Volatility 67.65% Risk-free interest rate 2.19% Expected life (in years) 6.62 Estimated illiquidity discount 46.0%

Note 6 YP Integration and Business Transformation Costs

YP Integration

In connection with the Acquisition of YP on June 30, 2017, the Successor Company has incurred exit and disposal costs associated primarily with closing office facilities and the reduction of workforce for the purpose of business integration and operational efficiencies. These exit and disposal costs include severance costs, charges related to terminating office facility leases, integration of systems to eliminate duplicative systems, legal costs, tax consulting, and accounting advisory services. The Company expects total charges associated with YP Integration to be approximately $230.0 million. YP Integration costs are recorded as general and administrative expense in the Company's Consolidated Statement of Comprehensive Income (Loss) for the year ended December 31, 2017.

The following table sets forth the components of the Successor Company's YP Integration costs for the year ended December 31, 2017:

Successor Company Year Ended December 31, 2017 (in thousands) Severance costs $ 28,683 Lease related costs 6,126 System consolidation costs 3,684 Legal costs 3,565 Tax and accounting advisory services 4,622 Other costs 9,109 Total YP Integration costs $ 55,789

45 The following table reflects the Successor Company's liabilities associated with YP Integration costs as of December 31, 2017:

Successor Company Beginning Balance Ending Balance January 1, 2017 Expense Payments December 31, 2017 (in thousands) Severance costs $ — $ 28,683 $ (16,690) $ 11,993 Lease related costs — 6,126 (1,311) 4,815 System consolidation costs — 3,684 (2,823) 861 Legal costs — 3,565 — 3,565 Tax and accounting advisory services — 4,622 (584) 4,038 Other costs — 9,109 (5,425) 3,684 Total YP Integration costs $ — $ 55,789 $ (26,833) $ 28,956

Business Transformation Costs

On December 11, 2014, the Company announced an organizational restructuring program, the costs of which the Company identified as business transformation costs. The program is designed to reorganize and strategically refocus the Company. The program includes the launch of virtual sales offices, enabling the Company to eliminate field sales offices, the automation of the sales process, integration of systems to eliminate duplicative systems, and workforce reductions. The Company expected total charges associated with the program to range from $120.0 million to $130.0 million. From inception through December 31, 2017, the Company has incurred costs of $125.9 million associated with the program. Business transformation costs are recorded as general and administrative expense in the Company's Consolidated Statements of Comprehensive Income (Loss).

Successor Company:

During the year ended December 31, 2017, the Successor Company recorded $10.6 million of business transformation costs. The Successor Company recorded business transformation costs of $15.6 million for the five months ended December 31, 2016.

The following table sets forth the components of the Successor Company's business transformation costs for the year ended December 31, 2017 and for the five months ended December 31, 2016:

Successor Company Year Ended Five Months Ended December 31, 2017 December 31, 2016 (in thousands) Severance costs $ 1,630 $ 4,107 Lease related costs 1,190 1,391 Tax and accounting advisory services 5,875 3,879 Other costs 1,884 6,173 Total business transformation costs $ 10,579 $ 15,550

46 The following table reflects the Successor Company's liabilities associated with the program as of December 31, 2017:

Successor Company Beginning Balance Ending Balance January 1, 2017 Expense Payments December 31, 2017 (in thousands) Severance costs $ 1,059 $ 1,630 $ (2,318) $ 371 Lease related costs 897 1,190 (878) 1,209 Tax and accounting advisory services 1,269 5,875 (5,981) 1,163 Other costs 12 1,884 (1,896) — Total business transformation costs $ 3,237 $ 10,579 $ (11,073) $ 2,743

The following table reflects the Successor Company's liabilities associated with the program as of December 31, 2016:

Successor Company Beginning Balance Ending Balance July 31, 2016 Expense Payments December 31, 2016 (in thousands) Severance costs $ 1,178 $ 4,107 $ (4,226) $ 1,059 Lease related costs 4,717 1,391 (5,211) 897 Tax and accounting advisory services — 3,879 (2,610) 1,269 Other costs (631) 6,173 (5,530) 12 Total business transformation costs $ 5,264 $ 15,550 $ (17,577) $ 3,237

Predecessor Company:

The Predecessor Company recorded business transformation costs of $11.7 million for the seven months ended July 31, 2016. During the year ended December 31, 2015, the Predecessor Company recorded $43.8 million of business transformation costs.

The following table sets forth the components of the Predecessor Company's business transformation costs for the seven months ended July 31, 2016 and for the year ended December 31, 2015:

Predecessor Company Seven Months Ended Year Ended July 31, 2016 December 31, 2015 (in thousands) Severance costs $ 3,376 $ (2,387) Lease related costs 2,175 16,478 Other costs 6,107 29,757 Total business transformation costs $ 11,658 $ 43,848

A severance charge was recorded in 2014 in accordance with the Company's severance plan, without enhancements and represented the cost of the Company's workforce reduction plans to lay off approximately 1,000 employees. During 2015, the Company recorded a credit to expense of $2.4 million to true-up this accrued cost.

47 The following table reflects the Predecessor Company's liabilities associated with the program as of July 31, 2016: Predecessor Company Beginning Balance Ending Balance December 31, 2015 Expense Payments July 31, 2016 (in thousands) Severance costs $ 1,483 $ 3,376 $ (3,681) $ 1,178 Lease related costs 5,894 2,175 (3,352) 4,717 Other costs 608 6,107 (7,346) (631) Total business transformation costs $ 7,985 $ 11,658 $ (14,379) $ 5,264

The following table reflects the Predecessor Company's liabilities associated with the program as of December 31, 2015: Predecessor Company Beginning Balance Ending Balance January 1, 2015 Expense Payments December 31, 2015 (in thousands) Severance costs $ 37,915 $ (2,387) $ (34,045) $ 1,483 Lease related costs — 16,478 (10,584) 5,894 Other costs — 29,757 (29,149) 608 Total business transformation costs $ 37,915 $ 43,848 $ (73,778) $ 7,985

Note 7 Additional Financial Information

Consolidated Statements of Comprehensive Income (Loss)

General and administrative expense

Successor Company:

The Successor Company's general and administrative expense for the year ended December 31, 2017 includes certain charges. During the year ended December 31, 2017, the Company recorded a remeasurement loss of $40.3 million associated with an actuarial true-up of pension benefits, and recorded YP Integration costs of $55.8 million, including severance of $28.7 million, and business transformation costs of $10.6 million.

The Successor Company's general and administrative expense for the five months ended December 31, 2016 includes a remeasurement loss of $39.9 million associated with an actuarial true-up of pension benefits, and business transformation costs of $15.6 million. Offsetting these charges, was a credit of $29.7 million associated with adjusting the fair value related to stock warrants.

Predecessor Company:

The Predecessor Company's general and administrative expense for the seven months ended July 31, 2016 includes $22.5 million of advisory fees associated with capital restructuring and $11.7 million of costs associated with business transformation costs, which includes $3.4 million of severance costs.

The Predecessor Company’s general and administrative expense for the year ended December 31, 2015 includes $22.6 million of advisory fees associated with capital restructuring and $43.8 million of business transformation costs, which includes a credit to expense of $2.4 million related to a true-up this accrued cost.

Additionally, during the year ended December 31, 2015, the Predecessor Company sold land and a building for $4.6 million, resulting in a loss of $0.7 million. This loss was recorded to general and administrative expense in the Predecessor Company's Consolidated Statement of Comprehensive Income (Loss) as part of business transformation costs.

48 Depreciation and amortization

The following table sets forth the components of depreciation and amortization expense for the Successor Company for the year ended December 31, 2017 and the five months ended December 31, 2016 and for the Predecessor Company for the seven months ended July 31, 2016 and the year ended December 31, 2015:

Successor Company Predecessor Company

Five Months Seven Months Year Ended Ended Ended Year Ended December 31, 2017 December 31, 2016 July 31, 2016 December 31, 2015 (in thousands) Amortization of intangible assets $ 268,094 $ 120,512 $ 138,090 $ 372,726 Amortization of capitalized software 18,653 3,492 5,804 21,075 Depreciation of fixed assets 14,688 4,943 6,560 16,614 Total depreciation and amortization $ 301,435 $ 128,947 $ 150,454 $ 410,415

Interest expense, net

The Successor Company recorded interest expense, net of $67.8 million during the year ended December 31, 2017 and $27.6 million during the five months ended December 31, 2016.

As a result of the Company filing for bankruptcy on May 16, 2016, the Predecessor Company discontinued recording interest expense on its outstanding debt obligations as of that date. The Predecessor Company recorded interest expense, net of $134.8 million for the seven months ended July 31, 2016, compared to $354.6 million for the year ended December 31, 2015. Interest expense, net consists primarily of interest expense associated with debt obligations, non-cash interest expense associated with the amortization of debt fair value adjustments, amortization of debt discounts, non-cash interest expense associated with payment-in-kind interest related to senior subordinated notes, and non-cash interest expense associated with the amortization of deferred financing cost, offset by interest income. Non-cash interest expense for the Predecessor Company was $48.4 million for the seven months ended July 31, 2016, compared to $114.5 million for the year ended December 31, 2015.

Reorganization items

49 The Predecessor Company recorded reorganization items and fresh start adjustments of $1,844.0 million during the seven months ended July 31, 2016. The following table sets forth the components of the Predecessor Company's reorganization items for the seven months ended July 31, 2016: Predecessor Company Seven Months Ended July 31, 2016 (in thousands) Gain on settlement of liabilities subject to compromise $ 630,154 Adjustment to goodwill 723,747 Write-off of deferred revenue and deferred directory costs 299,650 Adjustment to intangible assets 373,968 Adjustment to accumulated other comprehensive income (loss) (82,070) Other fresh start accounting adjustments (15,373) Write-off of unamortized fair value adjustments associated with debt obligations (75,935) Write-off of debt issuance costs (1,166) Professional advisory fees (8,984) Total reorganization items and fresh start adjustments, net $ 1,843,991

See Note 3, Emergence from Chapter 11, to these consolidated financial statements for additional information on the net gain on reorganization items and fresh start adjustments.

Balance Sheet

The following table sets forth additional financial information related to the Company's allowance for doubtful accounts at December 31, 2017, December 31, 2016, July 31, 2016 and December 31, 2015:

Allowance for doubtful accounts Successor Company Predecessor Company

Five Months Seven Months Year Ended Ended Ended Year Ended December 31, 2017 December 31, 2016 July 31, 2016 December 31, 2015 (in thousands) Balance at beginning of period $ 7,708 $ — $ 24,411 $ 30,097 Additions charged to revenue/expense (1) 49,087 8,654 42,067 54,904 Deductions (2) (25,602) (946) (66,478) (60,590) Ending balance (3) $ 31,193 $ 7,708 $ — $ 24,411

(1) - Includes bad debt expense (in general and administrative expenses) and sales allowance (recorded as contra revenue). (2) - Amounts written off as uncollectible, net of recoveries and sales adjustments. (3) - The ending allowance for doubtful account balances at July 31, 2016 was eliminated as a result of accounts receivable being stated at fair value through fresh start accounting.

50 Accounts payable and accrued liabilities

The following table sets forth additional financial information related to the Company's accounts payable and accrued liabilities at December 31, 2017 and 2016: Successor Company At December 31, 2017 2016 (in thousands) Accounts payable $ 53,280 $ 12,261 Accrued salaries and wages 76,620 26,226 Accrued severance 15,207 1,276 Accrued taxes 26,967 20,478 Accrued expenses 90,659 40,420 Customer refunds and advance payments 2,713 5,702 Total accounts payable and accrued liabilities $ 265,446 $ 106,363

Other comprehensive income (loss)

Upon emergence from bankruptcy, the Successor Company elected to immediately recognize pension related actuarial gains and losses in its operating results in the year in which the gains and losses occur. The Predecessor Company had recognized actuarial gains and losses as a component of equity in its Consolidated Balance Sheets. In accordance with Company policy, these gains and losses were amortized into operating results over the average future service period of active employees.

Given that upon emergence from bankruptcy, the Successor Company elected to immediately recognize actuarial gains and losses in its operating results in the year in which the gains and losses occur, there was no activity in other comprehensive income (loss) during the year ended December 31, 2017 or the five months ended December 31, 2016.

The following table set forth the components of the Predecessor Company's comprehensive income (loss) adjustments for pension benefits for the seven months ended July 31, 2016 and for the year ended December 31, 2015: Predecessor Company Seven Months Ended Year Ended July 31, 2016 December 31, 2015 Gross Taxes Net Gross Taxes Net (in thousands) Net income (loss) $1,296,595 $ (263,463) Adjustments for pension benefits: Accumulated actuarial gains (losses) $ (8,858) $ 2,911 (5,947) $(18,323) $ 5,653 (12,670) Reclassifications included in net income (loss): Amortization of actuarial losses (1,217) 1,201 (16) 5,564 (2,100) 3,464 Settlement losses (1,780) 493 (1,287) 15,235 (4,405) 10,830 Total reclassifications included in net income (loss) (2,997) 1,694 (1,303) 20,799 (6,505) 14,294 Adjustments for pension benefits (11,855) 4,605 (7,250) 2,476 (852) 1,624 Fresh start pension fair value adjustment 12,603 (4,286) 8,317 — — — Total comprehensive income (loss) $1,297,662 $ (261,839)

51 The following table sets forth the balance of the Predecessor Company's accumulated other comprehensive (loss). The ending balances as of July 31, 2016 and December 31, 2015 in accumulated other comprehensive (loss) are related to pension benefits:

Gross Taxes Net (in thousands) Accumulated other comprehensive (loss) - December 31, 2015 (Predecessor Company) $ (80,322) $ (3,417) $ (83,739) Adjustments for pension benefits, net of amortization 11,855 (4,605) 7,250 Fresh start pension fair value adjustment (12,603) 4,286 (8,317) Fresh start accounting adjustments 81,070 3,736 84,806 Accumulated other comprehensive income (loss) - July 31, 2016 (Successor Company) $ — $ — $ —

The taxes recorded in accumulated other comprehensive income (loss) include a valuation allowance of $33.7 million as of December 31, 2015.

Note 8 Fixed Assets and Capitalized Software

The following table sets forth the details of the Successor Company's fixed assets and capitalized software as of December 31, 2017 and 2016: Successor Company At December 31, 2017 2016 (in thousands) Land, buildings and building improvements $ 7,892 $ 10,768 Leasehold improvements 5,334 1,244 Computer and data processing equipment 31,125 16,907 Furniture and fixtures 6,123 2,060 Capitalized software 84,961 17,454 Assets under financing obligations 54,839 — Other 699 283 Fixed assets and capitalized software 190,973 48,716 Less accumulated depreciation and amortization 38,643 8,425 Fixed assets and capitalized software, net $ 152,330 $ 40,291

Depreciation and amortization expense associated with fixed assets and capitalized software for the Successor Company, including amortization associated with assets held under financing obligations, for the year ended December 31, 2017 was $33.3 million and for the five months ended December 31, 2016 was $8.4 million.

Depreciation and amortization expense associated with fixed assets and capitalized software for the Predecessor Company for the seven months ended July 31, 2016 was $12.4 million and for the year ended December 31, 2015 was $37.7 million.

Note 9 Debt Obligations

Upon emergence from bankruptcy, the outstanding debt obligations associated with the senior secured credit facilities were settled, with each of the existing holders of the senior secured credit facilities receiving as their recovery a pro rata share of the Successor Company's common stock (99,948,333 shares), a pro rata share of the Successor Company's $600.0 million term loan and their remaining cash collateral. The senior subordinated note holders received a payment of $5.0 million and stock warrants.

52 Successor Company: The following table sets forth the Successor Company's outstanding debt obligations at December 31, 2017 and 2016: Successor Company Interest Rate Carrying Value At December 31, At December 31, Maturity 2017 2016 2017 2016 (in thousands) Term loan July 29, 2021 11.4% 11.0% $ 652,000 $ 381,287 LIBOR + LIBOR + Line of credit April 29, 2021 4.00% 4.00% 160,012 100,000 Total debt obligations 812,012 481,287 Less: current maturities of long-term debt — — Long-term debt $ 812,012 $ 481,287

Term Loan Upon emergence from bankruptcy, the Company entered into a credit agreement (the “Dex Media Credit Agreement”) with several banks and other financial institutions or entities party hereto (the “Lenders”) and Wilmington Trust, National Association, as administrative agent for such lenders with initial borrowings of $600.0 million. Debt issuance costs of $5.0 million were netted against the term loan. As a part of fresh start accounting, the term loan was recorded at its fair value resulting in the immediate recognition of expense of these debt issuance costs. See Note 3, Emergence from Chapter 11, to the accompanying consolidated financial statements contained herein for further information. On June 30, 2017, an additional $550.0 million was borrowed with the proceeds being used to finance the Company’s purchase of YP. As of December 31, 2017, the outstanding balance of the term loan is $652.0 million. This term loan has a maturity date of July 29, 2021. The Dex Media Credit Agreement interest is paid on the last day of the interest period applicable to such borrowing. The applicable rate is 10.00% per annum plus the greater of (a) the rate per annum determined on the basis of the rate for deposits for a period equal to such interest period or (b) 1.00%. Accordingly, the minimum per annum rate was 11.00%.

Principal Payments

Dex Media is required to repurchase debt equal to 75% of Excess Cash Flow (“ECF”) for each full fiscal quarter, or if the leverage ratio is above 1.25, Dex Media is required to repurchase debt equal to 100% of ECF, subject to certain limitations. ECF repurchases are required starting with the fiscal quarter commencing on October 1, 2016, based on (a) net cash provided by operating activities of Dex Media and its subsidiaries for such quarterly period as reflected in the statement of cash flows on the consolidated financial statements of the Company, minus (b) the amount of capital expenditures made during such period, minus (c) minimum cash balance requirements. Repurchases shall be made within 45 days after the date on which financial statements for such fiscal quarter are (or are required to have been) delivered to the administrative agent and lenders.

During the year ended December 31, 2017, the Successor Company repurchased and retired $279.3 million of its term loan utilizing cash of $278.5 million. This included repurchases at par of $259.0 million and repurchases below par utilizing cash of $19.5 million to retire $20.3 million of the Successor Company's term loans. These transactions resulted in a gain of $0.8 million being recorded by the Successor Company.

During the five months ended December 31, 2016, the Successor Company repurchased and retired $218.7 million of its term loan utilizing cash of $217.6 million. This included repurchases at par of $175.4 million and repurchases below par utilizing cash of $42.2 million to retire $43.3 million of the Successor Company's term loans. These transactions resulted in a gain of $1.1 million being recorded by the Successor Company ($1.1 million gain offset by less than $0.1 million in administrative fees).

53 Debt Covenants

Line of Credit On December 15, 2016, the Company entered into a revolving credit agreement with Wells Fargo Bank, National Association, as Administrative Agent, whereby the Company may draw to finance ongoing general corporate and working capital needs. The Company may borrow up to a maximum amount of $150.0 million, subject to the terms and conditions of the credit agreement. The line of credit is secured by the Company’s accounts receivable and unbilled accounts receivable. The line of credit matures on April 29, 2021, and the interest rate is 3-month LIBOR plus 4.0%. To enter into the revolving credit agreement, the Company incurred debt issuance costs of $2.1 million. The debt issuance costs were reflected as an asset on December 31, 2016 and will be amortized ratably over the term of revolving credit agreement. On December 31, 2016, the Company had drawn $100.0 million on the line of credit. On April 21, 2017, the revolving line of credit agreement was amended to increase the maximum availability under the line of credit from $150.0 million to $200.0 million. On June 30, 2017, the revolving line of credit agreement was amended to increase the maximum availability under the line of credit from $200.0 million to $350.0 million and incurred additional debt issuance costs of $3.9 million. At December 31, 2017, due to the level of accounts receivable and unbilled accounts receivable available as security, the total availability under the line of credit was $295.0 million. The Successor Company had a balance of $5.3 million and $2.1 million of debt issuance costs related to the line of credit which are included in other non-current assets on the Consolidated Balance Sheets as of December 31, 2017 and 2016, respectively. These costs are amortized to interest expense over the remaining term of the revolving credit agreement on a straight line basis.

Predecessor Company:

Senior Secured Credit Facilities

In connection with the consummation of the merger between Dex One and SuperMedia on April 30, 2013, Dex Media entered into the Credit Agreements for each of SuperMedia Inc. (“SuperMedia”), R. H. Donnelley Inc. (“RHD”), Dex Media East, Inc. (“DME”), and Dex Media West, Inc. (“DMW”).

SuperMedia Credit Agreement

The SuperMedia Credit Agreement interest was paid (1) with respect to any base rate loan, quarterly, and (2) with respect to any Eurodollar loan, on the last day of the interest period applicable to such borrowing, at SuperMedia's option, at either:

• With respect to base rate loans, the highest (subject to a floor of 4.00%) of (1) the prime rate, (2) the federal funds effective rate plus 0.50%, or (3) adjusted London Inter-Bank Offered Rate (“LIBOR”) plus 1.00%, plus an interest rate margin of 7.60%, or

• With respect to Eurodollar loans, the higher of (1) adjusted LIBOR or (2) 3.00%, plus an interest rate margin of 8.60%. SuperMedia may elect interest periods of one, two or three months for Eurodollar borrowings.

As a result of the merger and adoption of purchase accounting on April 30, 2013, SuperMedia's Credit Agreement was recorded at its fair value of $1,082.0 million, from its face value of $1,442.0 million, resulting in a discount of $360.0 million. This debt fair value adjustment was amortized as an increase to interest expense over the remaining term of the SuperMedia Credit Agreement using the effective interest method and did not impact interest or principal payments. The unamortized portion of the discount as of December 31, 2015 was $113.2 million. Amortization of the debt fair value adjustment of $38.9 million was included in interest expense during the seven months ended July 31, 2016 and $89.4 million was included in interest expense for the year ended December 31, 2015. As a result of the bankruptcy proceeding in 2016, the remaining unamortized portion of the discount of $74.3 million was expensed as a reorganization item during the seven months ended July 31, 2016. 54 RHD Credit Agreement

The RHD Credit Agreement interest was paid (1) with respect to any base rate loan, quarterly, and (2) with respect to any Eurodollar loan, on the last day of the interest period applicable to such borrowing (with certain exceptions for interest periods of more than three months), at RHD's option, at either:

• With respect to Eurodollar loans, the higher of (1) adjusted LIBOR or (2) 3.00%, plus an interest rate margin of 6.75%. RHD may elect interest periods of one, two, three or six months for Eurodollar borrowings.

Dex East Credit Agreement

The Dex East Credit Agreement interest was paid (1) with respect to any base rate loan, quarterly, and (2) with respect to any Eurodollar loan, on the last day of the interest period applicable to such borrowing (with certain exceptions for interest periods of more than three months), at DME's option, at either:

• With respect to base rate loans, the highest (subject to a floor of 4.00%) of (1) the prime rate, (2) the federal funds effective rate plus 0.50%, or (3) adjusted LIBOR plus 1.00%, plus an interest rate margin of 2.00%, or • With respect to Eurodollar loans, the higher of (1) adjusted LIBOR or (2) 3.00%, plus an interest rate margin of 3.00%. DME may elect interest periods of one, two, three or six months for Eurodollar borrowings.

Dex West Credit Agreement

The Dex West Credit Agreement interest was paid (1) with respect to any base rate loan, quarterly, and (2) with respect to any Eurodollar loan, on the last day of the interest period applicable to such borrowing (with certain exceptions for interest periods of more than three months), at DMW's option, at either:

• With respect to base rate loans, the highest (subject to a floor of 4.00%) of (1) the prime rate, (2) the federal funds effective rate, plus 0.50%, or (3) adjusted LIBOR, plus 1.00%, plus an interest rate margin of 4.00%, or • With respect to Eurodollar loans, the higher of (1) adjusted LIBOR or (2) 3.00%, plus an interest rate margin of 5.00%. DMW may elect interest periods of one, two, three or six months for Eurodollar borrowings.

Effective March 10, 2015, the Company obtained an amendment to the Dex West Credit Agreement to permit the exclusion of certain cash expenditures associated with the Company's business transformation program from the definition of earnings before interest, taxes, depreciation and amortization (“EBITDA”) that was used for the leverage ratio covenant measure. An amendment fee of $4.9 million was paid and recorded as a debt discount. The debt discount was amortized as an increase to interest expense over the remaining term of the Dex West Credit Agreement using the effective interest method and did not impact future interest or principal payments. The unamortized portion of the debt discount at December 31, 2015 was $2.6 million. Amortization of the discount of $1.0 million was included in interest expense during the seven months ended July 31, 2016, and $2.3 million was included in interest expense during the year ended December 31, 2015. As a result of the bankruptcy proceeding in 2016, the remaining unamortized portion of the discount of $1.6 million was expensed as a reorganization item during the seven months ended July 31, 2016.

Debt Issuance Costs

Certain costs associated with the issuance of the Predecessor's senior secured credit facilities were capitalized. In accordance with ASU 2015-03, the Predecessor Company classified debt issuance costs as a direct deduction from the carrying value of the debt obligations. As of December 31, 2015, the Predecessor Company had $1.9 million of debt issuance costs which were classified as current maturities of long-term debt on the Consolidated Balance Sheet. During the seven months ended July 31, 2016, the Predecessor Company amortized $0.7 million of debt issuance costs. As a result of the bankruptcy proceeding in 2016, the remaining $1.2 million was expensed as a reorganization item during the seven months ended July 31, 2016.

Senior Subordinated Notes

The Predecessor Company's senior subordinated notes (the “Notes”) required interest payments, payable semi-annually on March 31 and September 30 of each year. The Notes accrued interest at 12% for cash interest payments and 14% for payments-in-kind (“PIK”) interest. PIK interest represented additional indebtedness and increased the aggregate principal amount owed. The Company was required to make interest payments of 50% in cash and 50% in PIK interest until maturity of 55 the senior secured credit facilities on December 31, 2016. For the semi-annual interest period ended March 31, 2015, the Predecessor Company made interest payments of 50% in cash and 50% in PIK interest resulting in the issuance of an additional $8.6 million of Notes. As mentioned above, the Predecessor Company elected not to make the semi-annual interest payment due on March 31, 2016, related to its senior subordinated notes. The Predecessor Company was restricted from making open market repurchases of its senior subordinated notes until maturity of the senior secured credit facilities on December 31, 2016.

Principal Payment Terms for Senior Secured Credit Facilities - Pre-Bankruptcy Filing

The Predecessor Company had mandatory debt principal payments due after each quarter prior to the December 31, 2016 maturity date on the outstanding senior secured credit facilities. RHD, DME and DMW were required to pay scheduled amortization payments, plus additional prepayments at par equal to each borrower's respective Excess Cash Flow (“ECF”), multiplied by the applicable ECF Sweep Percentage as defined in the respective senior secured credit facility (60% for RHD, 50% for DMW, and 70% in 2013 and 2014 and 60% in 2015 and 2016 for DME). SuperMedia was required to make prepayments at par in an amount equal to 67.5% of any increase in Available Cash, as defined in its senior secured credit facility.

In addition to these principal payments, the Predecessor Company could on one or more occasions use another portion of ECF or the increase in Available Cash, as applicable, to repurchase debt at market prices (“Voluntary Prepayments”) discounted from face value, as defined in the respective senior secured credit facility (12.5% for SuperMedia, 20% for RHD, 30% for DMW, and 15% in 2013 and 2014 and 20% in 2015 and 2016 for DME) and determined following the end of each quarter. These Voluntary Prepayments had to be made within 180 days after the date on which financial statements were delivered to the administrative agents. If a borrower did not make such Voluntary Prepayments within the 180-day period, the Company had to make a prepayment at par at the end of the quarter during which such 180-day period expires.

Any remaining portion of ECF or Available Cash, could be used at the Predecessor Company's discretion, subject to certain restrictions specified in each senior secured credit facility agreement.

2016 and 2015 Principal Payments

During the seven months ended July 31, 2016, the Predecessor Company made mandatory and accelerated principal payments on its senior secured credit facilities, at par, of $136.9 million. Accelerated principal payments consisted of prepayments of cash flow sweeps required under the senior secured credit facilities.

As part of the bankruptcy, during the seven months ended July 31, 2016, the Predecessor Company made a $5.0 million payment and issued stock warrants to the senior subordinated note holders.

During the year ended December 31, 2015, the Predecessor Company retired debt obligations of $200.1 million, under its senior secured credit facilities utilizing cash of $198.7 million. The Predecessor Company made mandatory and accelerated principal payments on its senior secured credit facilities, at par, of $192.2 million. Accelerated principal payments consisted of prepayments of cash flow sweeps required under the senior secured credit facilities. In addition, on April 8, 2015, the Predecessor Company repurchased and retired debt of $7.9 million utilizing cash of $6.5 million in accordance with the terms and conditions of its senior secured credit facilities. This transaction resulted in a gain of $1.3 million being recorded by the Predecessor Company ($1.4 million gain offset by $0.1 million in administrative fees and other adjustments). These debt retirements were partially offset by additional indebtedness from PIK interest of $17.9 million, on the Predecessor Company's senior subordinated notes.

Debt Covenants

Each of the senior secured credit facilities described above contained certain covenants that, subject to exceptions, limit or restrict each borrower's incurrence of liens, investments (including acquisitions), sales of assets, indebtedness, payment of dividends, distributions and payments of certain indebtedness, sale and leaseback transactions, swap transactions, affiliate transactions, capital expenditures, and mergers, liquidations and consolidations. For each senior secured credit facility, the Predecessor Company was required to maintain compliance with a consolidated leverage ratio covenant and a consolidated interest coverage ratio covenant (the “Financial Covenants”). Each of the senior secured credit facilities also contained certain covenants that, subject to exceptions, limited or restricted Dex Media's incurrence of liens, indebtedness, ownership of assets, sales of assets, payment of dividends or distributions or modifications of the senior subordinated notes.

56 The senior subordinated notes contained certain covenants that, subject to certain exceptions, among other things, limited or restricted the Predecessor Company's (and, in certain cases, the Predecessor Company's restricted subsidiaries) incurrence of indebtedness, making of certain restricted payments, incurrence of liens, entry into transactions with affiliates, conduct of its business, mergers, and consolidation or sale of all or substantially all of its property.

As of June 30, 2016, the Predecessor Company, while under bankruptcy protection, was not in compliance with its Financial Covenants associated with two of its senior secured credit facilities, and therefore all amounts related to these facilities were classified as liabilities subject to compromise on the Consolidated Balance Sheet.

Guarantees

Each of the Predecessor's senior secured credit facilities were separate facilities secured by the assets of each respective entity. The Shared Guarantee and Collateral agreement had certain guarantee and collateralization provisions supporting SuperMedia, RHD, DME and DMW. However, an event of default by one of the entities would have triggered a call on the applicable guarantor. An event of default by a guarantor on a guarantee obligation could be an event of default under the applicable credit facility, and if demand was made under the guarantee and the creditor accelerates the indebtedness, failure to satisfy such claims in full would in turn have triggered a default under all of the other credit facilities. A subordinated guarantee also provided that SuperMedia, RHD, DME and DMW guarantee the obligations of the other such entities, including SuperMedia, provided that no claim could be made on such guarantee until the senior secured debt of such entity was satisfied and discharged.

Other Financing Obligations

As part of the YP acquisition on June 30, 2017, the Company assumed certain financing obligations including a failed sale- leaseback financing liability associated with land and a building in Tucker, Georgia. In conjunction with this financing liability, the fair value of the land and building was included as a part of the total tangible assets acquired in the Acquisition. As of December 31, 2017, these financing obligations totaled $60.5 million, of which $3.5 million is reflected within the Current portion of financing obligations and the long-term portion is recorded within Financing obligations, net of current portion on the Company's Consolidated Balance Sheet.

Future Commitments

The Company’s debt consisting of its term loan, line of credit, and financing obligations, matures as follows: Debt Obligations (in thousands) 2018 $ 3,480 2019 863 2020 580 2021 812,751 2022 122 Thereafter 54,676 Total $ 872,472

Note 10 Commitments

The Company leases office facilities and equipment under operating leases with non-cancelable lease terms expiring at various dates through 2025. Rent and lease expense for the Successor Company for the year ended December 31, 2017 and the five months ended December 31, 2016 was $19.0 million and $4.9 million, respectively, including $7.3 million and $1.4 million, respectively, of lease expense recorded as part of YP Integration costs and business transformation costs. Rent and lease expense for the Predecessor Company for the seven months ended July 31, 2016 was $8.0 million, including $1.0 million of lease expense recorded as part of business transformation costs, and for the year ended December 31, 2015 was $28.1 million. The 2015 amount included $11.9 million of lease expense recorded as part of business transformation costs.

57 The future non-cancelable minimum rental obligations applicable to operating leases at December 31, 2017 are as follows: Minimum Rental Obligations (in thousands) 2018 $ 16,771 2019 14,380 2020 12,813 2021 6,894 2022 and thereafter 26,970 Total $ 77,828

The Company is also obligated to pay eight outsource service providers approximately $97.0 million over the years 2018 through 2022 for information technology application development and support, enterprise software services for customer relationship management, digital marketing automation and analytics, software licensing and support, database software maintenance, marketing data services, and business process management workflow automation used for digital product fulfillment. The future long-term commitments associated with the information technology and marketing support contracts at December 31, 2017 are as follows:

Information Technology Future Commitments (in thousands) 2018 $ 34,978 2019 30,801 2020 15,304 2021 13,155 2022 2,768 Total $ 97,006

Note 11 Employee Benefits

Pension

The Company has non-contributory defined benefit pension plans that provide pension benefits to certain employees. The accounting for pension benefits reflects the recognition of these benefit costs over the employee’s approximate service period based on the terms of the plan and the investment and funding decisions made. The determination of the benefit obligation and the net periodic pension cost requires management to make actuarial assumptions, including the discount rate and expected return on plan assets. For these assumptions, management consults with actuaries, monitors plan provisions and demographics, and reviews public market data and general economic information. Changes in these assumptions can have a significant impact on the projected benefit obligation, funding requirement and net periodic benefit cost.

Effective January 1, 2017, the four qualified pension plans, the Dex One Retirement Account, the Dex Media, Inc. Pension Plan, the SuperMedia Pension Plan for Management Employees and the SuperMedia Pension Plan for Collectively Bargained Employees were merged into one consolidated pension plan (the “Consolidated Pension Plan of Dex Media”). On June 30, 2017, Dex Media Holdings, Inc. purchased YP Holdings LLC. Dex Media Holdings, Inc. became the plan sponsor for the YP Holdings LLC Pension Plan with liabilities of $116 million and assets of $78 million. The Company also maintains two non- qualified pension plans for certain executives, the Dex One Pension Benefit Equalization Plan and the SuperMedia Excess Pension Plan. Pension assets related to the Company's qualified pension plans, which are held in master trusts and recorded on the Company's Consolidated Balance Sheet, are valued in accordance with applicable accounting guidance on fair value measurements. All pension plans have been frozen and no employees accrue future pension benefits under any of the pension plans.

The Predecessor Company had recognized actuarial gains and losses as a component of equity in its Consolidated Balance Sheets. In accordance with Company policy, these gains and losses were amortized into operating results over the average future service period of active employees. The Successor Company also changed the method used to estimate the interest cost component of pension net periodic cost by utilizing a full yield curve approach in the estimation of this component by 58 applying the specific spot rates along the yield curve used in the determination of the benefit obligation of the relevant projected cash flows. Prior to August 1, 2016, the Predecessor Company estimated the interest cost component utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. This change in estimate is expected to provide a more precise measurement of interest costs by improving the correlation between projected cash flows to the corresponding spot yield curve rates. We have accounted for this change as a change in accounting estimate that is inseparable from a change in accounting principle and accordingly have accounted for it prospectively.

Pension Net Periodic Cost

The components of net periodic cost for the pension plans are shown in the following table: Successor Company Predecessor Company

Year Ended Five Months Ended Seven Months Ended Year Ended December 31, 2017 December 31, 2016 July 31, 2016 December 31, 2015 (in thousands) Interest cost $ 18,983 $ 6,381 $ 13,469 $ 24,391 Expected return on assets (19,191) (10,720) (14,498) (30,230) Actuarial loss, net — — 1,345 5,564 Settlement losses 708 827 1,780 15,235 Remeasurement loss 40,304 39,945 — — Other — (235) (621) — Net periodic cost $ 40,804 $ 36,198 $ 1,475 $ 14,960

Since all pension plans have been frozen and no employees accrue future pension benefits under any of the pension plans, the Company no longer incurs service cost as a component of net periodic cost.

Successor Company: Upon emergence from bankruptcy, the Successor Company changed its method for recognizing actuarial gains and losses for pension benefits for all benefit plans. With this change, the Successor Company has elected to immediately recognize actuarial gains and losses in its operating results in the year in which the gains and losses occur. This accounting method is preferred because the pension assets and liabilities as presented on the balance sheet fully reflect the impact of all actuarial gains and losses.

For the year ended December 31, 2017 and the five months ended December 31, 2016, the Successor Company recorded pension settlement losses of $0.7 million and $0.8 million, respectively, related to employees that received lump-sum distributions. These charges were recorded in accordance with applicable accounting guidance for settlements associated with defined benefit pension plans, which requires that settlement gains and losses be recorded once prescribed payment thresholds have been reached. For the year ended December 31, 2017 and the five months ended December 31, 2016, the Successor Company recorded remeasurement losses of $40.3 million and $39.9 million, respectively. These losses were associated with the change in method of recognizing actuarial gains and losses. The losses in 2016 were primarily associated with unfavorable asset returns. The losses in 2017 were primarily from lump-sum payments made earlier than anticipated and lower interest rates.

Predecessor Company:

For the seven months ended July 31, 2016 and the year ended December 31, 2015 the Predecessor Company recorded pension settlement losses of $1.8 million and $15.2 million, respectively, related to employees that received lump-sum distributions.

59 The following table shows the weighted-average assumptions used for determining net periodic benefit pension cost for the Successor Company for the year ended December 31, 2017 and five months ended December 31, 2016, and for the Predecessor Company for the seven months ended July 31, 2016 and the year ended December 31, 2015: Successor Company Predecessor Company Year Ended Five Months Ended Seven Months Ended Year Ended December 31, 2017 December 31, 2016 July 31, 2016 December 31, 2015 PBO discount rate 4.00% 3.37% 4.23% 3.86% Interest cost discount rate 3.32% 2.65% 4.23% 3.86% Expected return on plan assets 4.27% 5.11% 5.11% 6.00% Rate of compensation increase N/A N/A N/A N/A

The following table sets forth the weighted-average assumptions used for determining the pension benefit obligations for the Company for the years ended December 31, 2017, 2016 and 2015: Successor Company Predecessor Company At December 31, At December 31, 2017 2016 2015 Discount rate 3.63% 4.00% 4.23% Rate of compensation increase N/A N/A N/A

Since all pension plans have been frozen and no employees accrue future pension benefits under any of the pension plans, the rate of compensation increase assumption is no longer needed. The Company determines the weighted-average discount rate by applying a yield curve comprised of the yields on several hundred high-quality, fixed-income corporate bonds available on the measurement date to expected future benefit cash flows.

Pension Benefit Obligations and Plan Assets

The following table summarizes the benefit obligations, plan assets, and funded status associated with pension and benefit plans for the year ended December 31, 2017 and the five months ended December 31, 2016: Successor Company Year Ended Five Months Ended December 31, 2017 December 31, 2016 (in thousands) Change in Benefit Obligations At January 1 $ 558,219 $ — At August 1 — 611,474 Acquisition 116,033 — Interest cost 18,983 6,483 Actuarial loss (gain), net 50,719 (32,981) Benefits paid (65,807) (26,757) Benefit obligations at December 31 $ 678,147 $ 558,219

Change in Plan Assets At January 1 $ 456,680 $ — At August 1 — 540,296 Acquisition 77,893 — Plan contributions 4,933 2,871 Actual return (loss) on plan assets 28,898 (59,730) Benefits paid (65,807) (26,757) Plan assets at December 31 $ 502,597 $ 456,680

Funded Status at December 31 (plan assets less benefit obligations) $ (175,550) $ (101,539)

60 The accumulated benefit obligation for all defined benefit pension plans was $678.1 million and $558.2 million as of December 31, 2017 and 2016, respectively.

Successor Company

During the year ended December 31, 2017 and the five months ended December 31, 2016, the Successor Company made cash contributions of $4.3 million and $2.4 million, respectively, to the qualified pension plans, as required under pension accounting guidelines, and contributions and associated payments of $0.6 million and $0.5 million, respectively, to the non- qualified plans.

The following table sets forth the amounts associated with pension plans recognized in the Successor Company’s Consolidated Balance Sheet at December 31, 2017 and 2016: Successor Company At December 31, 2017 2016 (in thousands) Non-current assets $ — $ 19,250 Current liabilities (1,340) (1,202) Non-current liabilities (174,210) (119,587) Net pension asset (liability) at December 31 $ (175,550) $ (101,539)

Identified below are amounts associated with the pension plans that have an accumulated benefit obligation greater than plan assets (under funded) at December 31, 2017 and 2016: Successor Company At December 31, 2017 2016 (in thousands) Accumulated benefit obligation $ 678,147 $ 359,467 Projected benefit obligation 678,147 359,467 Plan assets 502,597 238,678

Expected Cash Flows

The following table sets forth the expected future pension benefit payments: Expected Pension Benefit Payments

(in thousands) 2018 $ 69,824 2019 55,627 2020 49,441 2021 48,313 2022 44,799 2023 to 2027 194,726

Pension Plan Assets

The Company's overall investment strategy is to achieve a mix of assets, which allows it to meet projected benefits payments while taking into consideration risk and return. Depending on perceived market pricing and various other factors, both active and passive approaches are utilized.

The table below sets forth the fair values of the Company’s pension plan assets as of December 31, 2017 by asset category:

61 At December 31, 2017 Level 1 (quoted Level 2 prices in (significant Level 3 active observable (unobservable Total markets) input) inputs) (in thousands) Cash and cash equivalents $ 19,200 $ 3,108 $ 16,092 $ — Equity funds 13,325 13,325 — — U.S. treasuries and agencies 239,421 — 239,421 — Corporate bonds 62,908 — 62,908 — Other fixed income 13,664 — 13,664 — Total 348,518 $ 16,433 $ 332,085 $ — Hedge funds-investments measured at NAV as a practical expedient 154,079 Total plan assets $ 502,597

Cash and cash equivalents are comprised of cash and high-grade money market instruments with short-term maturities. U.S. treasuries and agencies are fixed income investments in U.S. government or agency securities. Corporate bonds are investments in corporate debt. Other fixed income includes a fixed income mutual fund, fixed income investment in non-U.S. agencies, investments in asset backed securities, swaps and collateral. Fixed income investments are intended to protect the invested principal while paying out a regular income. The Company uses derivatives, such as swaps and futures, to mitigate interest rate risk in pension plans. Additionally, and when appropriate, derivatives are used to match a specific benchmark thus keeping assets fully invested.

The table below sets forth the fair values of the Company’s pension plan assets, including total assets of $238,678 associated with under funded plans, as of December 31, 2016 by asset category: At December 31, 2016 Level 1 (quoted Level 2 prices in (significant Level 3 active observable (unobservable Total markets) input) inputs) (in thousands) Cash and cash equivalents $ 18,859 $ 6,688 $ 12,171 $ — U.S. treasuries and agencies 234,204 — 234,204 — Corporate bonds 29,621 — 29,621 — Other fixed income 7,040 — 7,040 — Total 289,724 $ 6,688 $ 283,036 $ — Hedge funds-Investments measured at NAV as a practical expedient 166,956 Total plan assets $ 456,680

Pension Plan Hedge Fund Investments

Hedge funds are private investment vehicles that manage portfolios of securities and use a variety of investment strategies with the objective to provide positive total returns regardless of market performance.

The Company uses NAV to determine the fair value of all the underlying investments which do not have a readily determinable value, and either have the attributes of an investment company or prepare their financial statements consistent with the measurement principles of an investment company. As of December 31, 2017 and 2016, the Company used NAV to value its hedge fund investments.

The Company's hedge fund investments are made through limited partnership interests in various hedge funds that employ different trading strategies. The Company has no unfunded commitments to these investments and has redemption rights with respect to its investments that range up to three years. As of December 31, 2017 and 2016, no single hedge fund made up more

62 than 3.0% of total pension plan assets. Examples of strategies followed by hedge funds include directional strategies, relative value strategies and event driven strategies. A directional strategy entails taking a net long or short position in a market. Relative value seeks to take advantage of mispricing between two related and often correlated securities with the expectation that the pricing discrepancy will be resolved over time. Relative value strategies typically involve buying and selling related securities. An event driven strategy uses different investment approaches to profit from reactions to various events. Typically events can include acquisitions, divestitures or restructurings that are expected to affect individual companies and may include long and short positions in common and preferred stocks, as well as debt securities and options.

The weighted asset allocation percentages for the pension plans by asset category are shown in the table below, at December 31, 2017 and 2016: At December 31, 2017 2016 Cash and cash equivalents 3.8% 4.1% Fixed income investments 62.9 59.3 Equity investments 2.7 — Hedge funds 30.6 36.6 Total 100.0% 100.0%

Prospective Pension Plan Investment Strategy

The Company has implemented a liability driven investment (“LDI”) strategy. As part of the LDI strategy, the Company may implement a hedge of the pension liability measured as a Liability Hedge Ratio. The Company may also invest assets as follows: hedge fund investments 25-45% of pension assets, fixed income investments 55-75% of pension assets, and cash and cash equivalent 0-20% of pension assets.

Expected Rate of Return for Pension Assets

The expected rate of return for the pension assets represents the average rate of return to be earned on plan assets over the period the benefits are expected to be paid. The expected rate of return on the plan assets is developed from the expected future return on each asset class, weighted by the expected allocation of pension assets to that asset class. Historical performance is considered for the types of assets in which the plan invests. Independent market forecasts and economic and capital market considerations are also utilized.

Effective January 1, 2017, the Dex One Retirement Account, the Dex Media, Inc. Pension Plan, the SuperMedia Pension Plan for Management Employees and the SuperMedia Pension Plan for Collectively Bargained Employees were merged into one consolidated pension plan, the Consolidated Pension Plan of Dex Media. On June 30, 2017, Dex Media Holdings, Inc. purchased YP Holdings LLC and Dex Media Holdings, Inc. became the plan sponsor for the YP Holdings LLC Pension Plan.

In 2018, the expected rate of return for both the Consolidated Pension Plan of Dex Media and the YP Holdings LLC Pension Plan is 5.0%. The actual rate of return on assets for the Consolidated Pension Plan of Dex Media during 2017 was 6.5%. The actual return on assets for the YP Holdings LLC Pension Plan from June 30, 2017 to December 31, 2017 was 1.5%. During 2016, the actual rate of return on assets for the Dex One Retirement Account and the Dex Media, Inc. Pension Plan was (5.2). During 2016, the actual rate of return on assets for the SuperMedia Pension Plan for Management Employees and for the SuperMedia Pension Plan for Collectively Bargained Employees was 2.5%.

Long-Term Disability Benefits

As of December 31, 2017 and 2016, the Company had an employee benefit liability associated with long-term disability plans of $15.5 million and $14.4 million, respectively.

Savings Plans Benefits

The Company sponsors defined contribution savings plans to provide opportunities for eligible employees to save for retirement. The savings plans include the Dex Media, Inc. Savings Plan and as of June 30, 2017, the YP Holdings LLC Retirement Savings Plan, YP Holdings LLC Success Sharing Plan, Print Media LLC 401(k) Plan for Bargained Employees, and the Print Media LLC 401(k) Plan for Non Bargained Employees. Substantially all of the Company's employees are eligible to participate in the plans. Participant contributions may be made on a pre-tax, after-tax, or Roth basis. Under the

63 plans, a certain percentage of eligible employee contributions are matched with Company cash contributions that are allocated to the participants' current investment elections. The Company recognizes its contributions as savings plan expense based on its matching obligation to participating employees. For the year ended December 31, 2017, the Successor Company recorded total savings plan expense of $7.7 million for the Dex Media, Inc. Savings Plan and $5.7 million for the YP Plans. For the five months ended December 31, 2016, the Successor Company recorded total savings plan expense of $2.9 million. For the seven months ended July 31, 2016, and the year ended December 31, 2015, the Predecessor Company recorded total savings plan expense of $6.2 million and $11.3 million, respectively.

Note 12 Long-Term Incentive Compensation

On the bankruptcy Effective Date, all of the Predecessor Company's long-term incentive compensation plans were cancelled. During the five months ended December 31, 2016, the Successor Company issued a new long-term incentive compensation plan.

Successor Company:

The Dex Media, Inc. 2016 Stock Incentive Plan (“Stock Incentive Plan”) provides for several forms of incentive awards to be granted to designated eligible employees, non-management directors, and independent contractors providing services to the Successor Company. The maximum number of shares of Dex Media common stock authorized for issuance under the Stock Incentive Plan is 11,100,000.

Stock Options

The Stock Incentive Plan permits grants of stock or cash-settled stock options. These awards are classified as liability awards based on the criteria established by the applicable accounting rules for stock-based compensation.

During the year ended December 31, 2017 the Successor Company granted stock option awards to certain employees and non- management directors, at a weighted-average exercise price of $6.26 that vest over a three-year period ending on January 1, 2021, and have a 10-year term from the date of grant.

During the year ended December 31, 2016, the Successor Company granted stock option awards to certain employees and non- management directors, at an exercise price of $2.04 that vest over a three-year period ending on January 1, 2020, and have a 10- year term from the date of grant.

A stock option holder may pay the option exercise price in cash, by delivering unrestricted shares to the Successor Company having a value at the time of exercise equal to the exercise price, by a cashless broker-assisted exercise, by a loan from the Successor Company, or by a combination of these methods.

Any unvested portion of the stock option award will be forfeited upon the employee’s termination of employment with the Company for any reason before the date the option vests, except that the Compensation and Benefits Committee of the Company, at its sole option and election, may provide for the accelerated vesting of the stock option award. If the Company terminates the employee without cause or the employee resigns for good reason, then the employee is eligible to exercise the stock options that vested on or before the effective date of such termination or resignation. If the Company terminates the employee for cause, then the employee's stock options, whether or not vested, shall terminate immediately upon termination of employment. The Compensation and Benefits Committee of the Company shall have the authority to determine the treatment of awards in the event of a change in control of the Company or the affiliate which employs the award holder.

The fair value of each stock option award is estimated using the Black-Scholes option pricing model. The model incorporates assumptions regarding inputs as follows:

• Due to the lack of trading volume of the Company's common stock, expected volatility is based on the debt-leveraged historical volatility of the Company's peer companies; • Expected life is calculated based on the average life of the vesting term and the contractual life of each award; and • The risk-free interest rate is determined using the U.S. Treasury zero-coupon issue with a remaining term equal to the expected life of the option.

64 Weighted-average stock option fair values and assumptions for the year ended December 31, 2017 and the five months ended December 31, 2016 are disclosed in the following table:

Successor Company Year Ended Five Months Ended December 31, 2017 December 31, 2016 Weighted-average fair value $ 5.90 $ 1.55 Dividend yield — — Volatility 57.48% 69.86% Risk-free interest rate 2.18% 2.05% Expected life (in years) 4.86 5.77

Changes in the Successor Company's outstanding stock option awards were as follows for the year ended December 31, 2017:

Successor Company Year Ended December 31, 2017

Weighted- Weighted- Average Number of Average Remaining Aggregate Stock Option Exercise Contractual Intrinsic Awards Price Term (years) Value Outstanding stock option awards at January 1, 2017 10,817,500 $ 2.04 9.76 $ 3,677,950 Granted 303,750 6.26 — — Exercises — — — — Forfeitures/expirations (21,250) 2.04 — — Outstanding stock option awards at December 31, 2017 11,100,000 $ 2.16 8.79 $59,324,500

Exercisable at December 31, 2017 1,527,778 $ 2.04 8.74 $ 8,341,668

Changes in the Successor Company's outstanding stock option awards were as follows for the five months ended December 31, 2016:

Successor Company Five Months Ended December 31, 2016

Weighted- Weighted- Average Number of Average Remaining Aggregate Stock Option Exercise Contractual Intrinsic Awards Price Term (years) Value Outstanding stock option awards at August 1, 2016 — $ — — $ — Granted 10,817,500 2.04 10.00 — Exercises — — — — Forfeitures/expirations — — — — Outstanding stock option awards at December 31, 2016 10,817,500 $ 2.04 9.76 $ 3,677,950

No options were exercisable at December 31, 2016.

Stock-Based Compensation Expense

Stock-based compensation expense recognized by the Successor Company for the year ended December 31, 2017 and the five months ended December 31, 2016 was $23.4 million and $1.3 million, respectively. These costs were recorded as part of general and administrative expense on the Successor Company's Consolidated Statement of Comprehensive Income (Loss). As discussed previously, the Company elected to early adopt ASU 2016-09, which permits the Company to record the effect of forfeitures as they occur as a cumulative adjustment to stock-based compensation expense. 65 As of December 31, 2017, unrecognized stock-based compensation expense related to the unvested portion of the Successor Company's stock option awards was approximately $40.8 million, and is expected to be recognized over a weighted-average period of approximately 2.0 years.

Predecessor Company:

The Predecessor Company had the Dex Media, Inc. Equity Incentive Plan, the Dex Media, Inc. Amended and Restated Long- Term Plan, and the Value Creation Program, which provided the opportunity to earn long-term incentive compensation for non- management directors, designated eligible employees and other service providers, as applicable.

Stock-Based Compensation

The Dex Media, Inc. Equity Incentive Plan and the Dex Media, Inc. Amended and Restated Long-Term Incentive Plan (“Predecessor Company Stock-Based Plans”) provided for several forms of incentive awards to be granted to designated eligible employees, non-management directors, consultants and independent contractors providing services to the Predecessor Company. The maximum number of shares of the Predecessor Company's common stock authorized for issuance under the Predecessor Company Stock-Based Plans was 1,264,911. During the seven months ended July 31, 2016, the Predecessor Company did not grant any equity awards under the Predecessor Company Stock-Based Plans. During the year ended December 31, 2015, the Predecessor Company granted equity awards under the Predecessor Company Stock-Based Plans.

Stock Options

The Predecessor Company Stock-Based Plans provided for grants of stock options. These awards were classified as equity awards based on the criteria established by the applicable accounting rules for stock-based compensation. The Predecessor Company did not grant any stock option awards during the seven months ended July 31, 2016 or the year ended December 31, 2015.

A stock option holder could have paid the option exercise price in cash, by delivering unrestricted shares to the Predecessor Company having a value at the time of exercise equal to the exercise price, by a cashless broker-assisted exercise, by a combination of these methods, or by any other method approved by the Compensation and Benefits Committee of the Predecessor Company's Board of Directors. Stock option awards could not be re-priced without the approval of the Predecessor Company's shareholders.

Any unvested portion of the stock option award would have been forfeited upon the employee’s termination of employment with the Predecessor Company for any reason before the date the option vested, except that the Compensation and Benefits Committee of the Predecessor Company, at its sole option and election, may have provided for the accelerated vesting of the stock option award. If the Predecessor Company had terminated the employee without cause or the employee had resigned for good reason, then the employee was eligible to exercise the stock options that vested on or before the effective date of such termination or resignation. If the Predecessor Company terminated the employee for cause, then the employee's stock options, whether or not vested, would have been terminated immediately upon termination of employment. In the event the employee was terminated by the Predecessor Company without cause or the employee resigned for good reason within six months prior to or two years following a change in control, any unvested portion of such employee's stock options would have become fully vested on the date of such termination or the date of the change in control.

The fair value of each stock option award was estimated on the grant date using the Black-Scholes option pricing model. The model incorporated assumptions regarding inputs as follows:

• Expected volatility was a blend of the implied volatility of the Predecessor Company common stock as of the grant date, the historical volatility of the Predecessor Company common stock over its history, and the historical volatility of Predecessor Company's peer companies; • Expected life was calculated based on the average life of the vesting term and the contractual life of each award; and • The risk-free interest rate is determined using the U.S. Treasury zero-coupon issue with a remaining term equal to the expected life of the option.

66 Changes in the Predecessor Company's outstanding stock option awards were as follows for the year ended December 31, 2015 and the seven months ended July 31, 2016:

Weighted- Weighted- Average Number of Average Remaining Aggregate Stock Option Exercise Contractual Intrinsic Awards Price Term (years) Value

Outstanding stock option awards at January 1, 2015 909,799 $ 9.17 9.31 $ 408,757 Granted 30,972 8.25 10.00 — Exercises — — — — Forfeitures/expirations (414,590) 10.13 7.83 — Outstanding stock option awards at December 31,

2015 526,181 8.36 8.73 —

Granted — — — —

Exercises — — — —

Forfeitures/expirations (526,181) $ 8.36 8.15 —

Outstanding stock option awards at July 31, 2016 — — — $ —

Stock-Based Compensation Expense

The stock-based compensation expense for the Predecessor Company recognized during the seven months ended July 31, 2016 includes $1.2 million associated with the cancellation of the awards. Because the cancellation of the awards was not accompanied by a concurrent grant, this represented the entire unrecognized compensation expense associated with these awards. Therefore, as of July 31, 2016, the unrecognized compensation expense related to the unvested portion of the Predecessor Company's stock options was zero. Stock-based compensation costs were recorded as part of general and administrative expense on the Predecessor Company's Consolidated Statements of Comprehensive Income (Loss), except for the $1.2 million associated with the cancellation of the awards, which was recorded as part of reorganization items in the seven months ended July 31, 2016 Consolidated Statements of Comprehensive Income (Loss).

The following table sets forth stock-based compensation expense recognized by the Successor Company for the year ended December 31, 2017 and the five months ended December 31, 2016, and the Predecessor Company for the seven months ended July 31, 2016 and the year ended December 31, 2015:

Value Creation Programs

Effective October 14, 2014, the Predecessor Company adopted the Value Creation Program (“VCP”). The VCP enabled the Predecessor Company to retain and award designated executive employees by providing an opportunity to receive long-term compensation based on the net value creation in the Predecessor Company. The bonus pool under the VCP represented 7% of the total “Value Creation” under the program and was comprised of 700,000 award units. To the extent not all of the units were awarded by the end of the performance period, the unallocated units were to be allocated to the participating executives in proportion to the number of units awarded each executive.

During 2015, the Predecessor Company implemented the Value Creation Program Two (“VCP2”), to provide certain other employees with an opportunity to receive long-term compensation based on the same net value creation in the Predecessor Company as defined in the VCP. Each unit under the VCP2 was equivalent in value to a unit under the VCP. Under the VCP2, additional units could have been awarded in future periods.

67 Value creation was measured as the net change over the performance period commencing October 14, 2014 and ending July 31, 2016 in the fair market value of the Predecessor Company’s total invested capital, including equity securities, debt securities, and bank debt; plus cash dividends and cash payments (interest and principal) to debt, but reduced by any net value contributed from external sources, in each case as determined in the manner provided by the VCP. The VCP specified that the fair market value of total invested capital at the beginning of the performance period (October 14, 2014) and the end of the performance period (July 31, 2016) was to be determined based on the average trading prices of equity securities, debt securities, and bank debt for the 20 days preceding each date.

The Successor Company has not adopted any component of this Value Creation Program. Accordingly, no amounts related to this program are included within the Successor Company's Consolidated Balance Sheets and Statements of Comprehensive (Loss) as of and for the year and five months ended December 31, 2017 and 2016, respectively.

Note 13 Income Taxes

The following table sets forth the components of the Successor Company's provision (benefit) for income taxes for the year ended December 31, 2017, and the five months ended December 31, 2016, and the Predecessor Company’s provision (benefit) for income taxes for the seven months ended July 31, 2016 and the year ended December 31, 2015:

Successor Company Predecessor Company Year Ended Five Months Ended Seven Months Year Ended December 31, December 31, Ended July 31, December 31, 2017 2016 2016 2015 (in thousands) Current Federal $ 64,861 $ (105) $ 174 $ (6,596) State and local 9,594 1,450 1,294 429 74,455 1,345 1,468 (6,167) Deferred Federal (123,903) (276,820) 385,038 (25,040) State and local (18,093) (11,249) 54,994 (8,410) (141,996) (288,069) 440,032 (33,450) Total provision (benefit) for income taxes $ (67,541) $ (286,724) $ 441,500 $ (39,617)

68 The following table sets forth the principal reasons for the differences between the effective income tax rate and the statutory federal income tax rate for the Successor Company for the year ended December 31, 2017, and the five months ended December 31, 2016, and for the Predecessor Company for the seven months ended July 31, 2016 and the year ended December 31, 2015: Successor Company Predecessor Company Year Ended Five Months Ended Seven Months Year Ended December 31, December 31, Ended July 31, December 31, 2017 2016 2016 2015

Statutory federal tax rate 35.0% 35.0% 35.0% 35.0% State and local taxes, net of federal tax benefit 3.0 3.8 4.6 3.0 Goodwill impairment — (29.7) — — Non-taxable fresh start and reorganization adjustments, net — — (27.2) — Non-taxable fair value adjustment — 1.2 — — Non-deductible interest expense — — 0.1 (1.8) Non-deductible meals, officers compensation and other (0.8) — — (0.1) Tax attribute reduction — 13.8 18.7 (49.5) Subsidiary basis adjustment 0.3 7.7 4.7 — Change in valuation allowance (34.1) 0.1 (10.2) 26.5 Change in unrecognized tax benefits 0.1 0.3 — 0.7 Change in state tax laws and deferred items 1.5 (0.6) 0.1 (2.0) Impact of federal tax reform legislation 7.1 — — — Taxable reorganization adjustments 15.3 — — — Other, net 0.9 (0.1) (0.4) 1.2 Effective tax rate 28.3% 31.5% 25.4% 13.0%

On December 22, 2017, H.R.1, formally known as the Tax Cuts and Jobs Act ("2017 Tax Act") was enacted into law. This new tax legislation, among other changes, reduces the Federal corporate income tax rate from 35% to 21% effective January 1, 2018. Under GAAP, we are required to revalue our net deferred tax liability associated with our net taxable temporary differences in the period in which the new tax legislation is enacted based on deferred tax balances as of the enactment date, to reflect the effect of such reduction in the corporate income tax rate. Such revaluation resulted in a non-cash net deferred income tax benefit of $17.0 million recognized in continuing operations, decreasing our net deferred tax liability.

In addition to the statutory rate change, the corporate Alternative Minimum Tax (“AMT”) will be repealed prospectively, while permitting AMT credit carryovers from prior tax years subject to certain limitations. The new law will also repeal the Net Operating Loss (“NOL”) two-year carryback provision, yet permit an indefinite carryforward provision instead of the current twenty-year carryforward provision. Other provisions of the bill will place limitations on the deduction of net business interest expenses and NOL deductions. The Company is currently assessing the impact this tax legislation will have on its cash tax payments, financial statements and related disclosures.

Following the enactment of the 2017 Tax Act, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) 118 to provide guidance on the accounting and reporting impacts of the 2017 Tax Act. SAB 118 states that companies should account for changes related to the 2017 Tax Act in the period of enactment if all information is available and the accounting can be completed. In situations where companies do not have enough information to complete the accounting in the period of enactment, a company must either 1) record an estimated provisional amount if the impact of the change can be reasonably estimated; or 2) continue to apply the accounting guidance that was in effect immediately prior to the 2017 Tax Act if the impact of the change cannot be reasonably estimated. If estimated provisional amounts are recorded, SAB 118 provides a measurement period of no longer than one year during which companies should adjust those amounts as additional information becomes available. The Company has made a reasonable estimate of the income tax effects of the Act at December 31, 2017 based on the provisions of the federal and state tax laws in effect at the time such new legislation was enacted. Additional work is necessary for a more detailed analysis of the Company’s deferred tax assets and liabilities as well

69 as potential correlative adjustments. Any subsequent adjustments to those amounts will be recorded to current tax expense when the analysis is completed.

For the year ended December 31, 2015, the Company's provision (benefit) for income taxes includes a ($8.2) million (benefit) to correct a prior period error associated with the reduction of tax attributes resulting from the cancellation of debt income upon the Company’s emergence from bankruptcy on January 31, 2010 and a ($8.0) million (benefit) to correct a prior period error associated with the determination of the valuation allowances related to deferred tax assets. The errors were immaterial to prior periods and the corrections of the errors are considered immaterial to the consolidated financial statements for the year ended December 31, 2015.

Deferred Taxes

Deferred taxes arise because of differences in the book and tax basis of certain assets and liabilities. A valuation allowance is recognized to reduce gross deferred tax assets to the amount that will more likely than not be realized. The following table sets forth the significant components of the Company's deferred income tax assets and liabilities as of December 31, 2017 and 2016: Successor Company At December 31, 2017 2016 (in thousands) Deferred tax assets Allowance for doubtful accounts $ 6,264 $ 10,458 Deferred and other compensation 16,856 8,277 Deferred directory costs and commissions — 403 Capital investments 3,805 5,946 Debt, capitalized fees, and other interest 1,306 5,383 Pension and other post-employment benefits 48,125 44,951 Restructuring reserve 4,283 716 Net operating loss and credit carryforwards 68,619 42,830 Fixed assets and capitalized software 1,642 — Other, net 15,451 10,929 Total deferred tax assets 166,351 129,893 Valuation allowance (136,766) (60,621) Net deferred tax assets $ 29,585 $ 69,272 Deferred tax liabilities Fixed assets and capitalized software $ (49,716) $ (6,181) Goodwill and intangible assets (16,664) (148,889) Deferred revenue (11,028) (51,987) Deferred directory costs and commissions (2,287) — Investment in subsidiaries — (2,345) Gain on debt retirement (833) (5,677) Total deferred tax liabilities $ (80,528) $ (215,079) Net deferred tax liability $ (50,943) $ (145,807)

The Company establishes a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. In evaluating the ability to realize deferred tax assets, the Company considers all available positive and negative evidence, in determining whether, based on the weight of that evidence, a valuation allowance is needed for some or all of their deferred tax assets. In determining the need for a valuation allowance on the Company’s deferred tax assets the Company places greater weight on recent and objectively verifiable current information, as compared to more forward looking information that is used in valuing other assets on the balance sheet. The Company has considered taxable income in prior carryback years, future reversals of existing taxable temporary differences, future taxable income, and tax planning strategies in assessing the need for the valuation allowance. If the Company was to determine that it 70 would be able to realize the deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance, which would reduce the provision for income taxes. Due to the level of the Company’s results of operations, management believes that it is more-likely-than-not that the Company would not be able to realize all the benefits of its deferred tax assets and accordingly recognized a valuation allowance of $136.8 million and $60.6 million for the years ended December 31, 2017 and the five months ended December 31, 2016, respectively. See valuation allowance schedule below:

Successor Company Predecessor Company Seven Year Five Months Months Ended Year Ended Impact of Rate Ended Ended July December December 31, Change December 31, 31, 31, 2017 2016 2016 2015 (in thousands) Balance at beginning of period $ 55,384 $ 60,621 $ 61,335 $ 272,262 $ 352,652 Net additions charged to revenue and expense 81,382 (5,237) (714) (177,243) (80,390) Net charges to other balance sheet accounts — — — (33,684) — Balance at end of period $ 136,766 $ 55,384 $ 60,621 $ 61,335 $ 272,262

At December 31, 2017, the Company had net operating loss carryforwards of $1.2 million for federal income tax purposes and $586.6 million for state income tax purposes, which will begin to expire in 2020 and 2018, respectively.

The Company files its income tax returns with federal and various state jurisdictions within the United States. Generally, tax years 2014 through 2016 are subject to examination by the Internal Revenue Service, however, certain other periods remain open to examination due to the existence of net operating loss carryforwards. State tax returns are open for examination for an average of three years; however, certain jurisdictions remain open to examination longer than three years due to the existence of net operating loss carryforwards. The Company is currently under federal tax examination for tax years 2012 through 2015 and does not have any other significant state or local examinations in process.

Unrecognized Tax Benefits

The Company records unrecognized tax benefits for the estimated risk associated with tax positions taken on tax returns.

The following table shows changes to and balances of unrecognized tax benefits for the Successor Company for the year ended December 31, 2017 and the five months ended December 31, 2016, and for the Predecessor Company for the seven months ended July 31, 2016 and the year ended December 31, 2015: Successor Company Predecessor Company Year Ended Five Months Ended Seven Months Year Ended December 31, December 31, Ended July 31, December 31, 2017 2016 2016 2015 (in thousands) Balance at beginning of period $ 3,753 $ 7,248 $ 7,074 $ 10,795 Gross additions for tax positions related to the current year 2,482 — — — Gross additions for tax positions related to prior years 51,841 84 174 426 Gross reductions for tax positions related to prior years (970) — — (457) Gross reductions for tax positions related to the lapse of applicable statute of limitations (2,825) (3,579) — (3,423) Settlements — — — (267) Balance at end of period $ 54,281 $ 3,753 $ 7,248 $ 7,074 71 For the year ended December 31, 2017 and the five months ended December 31, 2016, the Successor Company’s unrecognized tax benefits increased by $50.5 million and reduced by $3.5 million, respectively. The increase for the year ended December 31, 2017 was primarily due to the addition of tax positions related to the acquisition of YP of $51.8 million. The decrease for the five months ended December 31, 2016 was primarily due to the expiration in the statute of limitations in various jurisdictions of $3.6 million, most of which related to state tax issues.

For the seven months ended July 31, 2016, the Predecessor Company’s unrecognized tax benefits increased $0.2 million. This increase was primarily due to additions for state tax positions related to prior years.

For the year ended December 31, 2015, the Predecessor Company's unrecognized tax benefits decreased $3.7 million. This decrease was primarily due to the expiration in the statute of limitations in various jurisdictions of ($3.4) million, most of which related to state tax issues and reductions for state tax positions related to prior years of ($0.5) million.

For the years ended December 31, 2017 and the five months ended December 31, 2016, the Company had $54.3 million and $3.8 million, respectively, of unrecognized tax benefits that, if recognized, would impact the effective tax rate. The Company recorded interest and penalties related to unrecognized tax benefits as part of the provision (benefit) for income taxes on the Successor Company’s consolidated statements of comprehensive income (loss) of $0.2 million for the year ended December 31, 2017 and ($0.5) million for the five months ended December 31, 2016 and on the Predecessor Company's consolidated statements of comprehensive income (loss) of $0.2 million for the seven months ended July 31, 2016 and ($0.2) million for the year ended December 31, 2015. Unrecognized tax benefits include $0.2 million and $0.5 million of accrued interest as of December 31, 2017 and 2016, respectively.

It is reasonably possible that up to $0.4 million of unrecognized tax benefits could decrease within the next twelve months, due to expiration of the statute of limitations in various jurisdictions.

Note 14 Contingencies

Litigation

The Company is subject to various lawsuits and other claims in the normal course of business. In addition, from time to time, the Company receives communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which the Company operates.

The Company establishes reserves for the estimated losses on specific contingent liabilities, for regulatory and legal actions where the Company deems a loss to be probable and the amount of the loss can be reasonably estimated. In other instances, the Company is not able to make a reasonable estimate of liability because of the uncertainties related to the outcome or the amount or range of potential loss. The Company does not expect that the ultimate resolution of pending regulatory and legal matters in future periods will have a material adverse effect on the Consolidated Statements of Comprehensive Income (Loss).

AGI Publishing, Inc. v. YP Western Directory, LLC, et. al. - On October 23, 2017, the Corporation settled a pending lawsuit brought by AGI Publishing, Inc. against YP Western Directory, LLC in the state of California. The central allegation of the lawsuit was that YP sold print advertising at or below fully-distributed cost with the intent to harm competition. In the settlement agreement, the Corporation denied any and all allegations brought by AGI; however, the Corporation agreed to settle the case in order to avoid the burden and expenses of continued litigation.

Bruce Fulmer, et. al. v. Scott W. Klein, Donald B. Reed, Stephen L. Robertson, Thomas S. Rogers, Paul E. Weaver, John J. Mueller, Jerry V. Elliott, Samuel D. Jones, Katherine J. Harless, The Employee Benefits Committee, Georgia Scaife, William Gist, Steven Garberich, Clifford Wilson, Bill Mundy, Andrew Coticchio, the Human Resources Committee and John Does 1-20; Case No. 3:09-cv-2354-N - On December 10, 2009, Bruce Fulmer, a former Idearc Media employee who has a history of litigation against the Company, individually and behalf of others allegedly similarly situated (“Plaintiff”), filed a putative class action in the United States District Court for the Northern District of Texas (Dallas Division), against certain officers, directors and members of the Company’s Executive Benefits Committee (“Defendants”). Plaintiff claims Defendants breached fiduciary duties in violation of ERISA in administrating various savings plans from November 17, 2006 to March 31, 2009 and seeks to recover losses to the plans. On April 1, 2010, Randy Kopp, another former Idearc Media employee filed a similar case, which has been consolidated with the Fulmer matter. Plaintiffs originally alleged, among other claims, that Defendants breached a duty of prudence, duty of loyalty, and duty to monitor by wrongfully allowing all the plans to invest in Idearc’s common stock. On March 16, 2011, the Court granted the Defendants’ Motion to Dismiss the consolidated Complaint, and on March 15, 2012, following amendment, the Court again granted the Defendants’ Motion to Dismiss. On July 9, 2013, the U.S. Court of Appeals for the Fifth Circuit affirmed the dismissal. On July 1, 2014, the U.S. Supreme Court granted 72 Plaintiffs’ petition for certiorari, vacated the judgment, and remanded for further consideration. On August 7, 2014, the Court of Appeals for the Fifth Circuit remanded to the District Court. On February 17, 2015, Plaintiffs filed a Second Amended Consolidated Complaint, reasserting claims based on allowing plans to invest in Idearc common stock. On February 26, 2016, the Court granted the Defendants’ Motion to Dismiss the Second Amended Complaint and also granted Plaintiffs’ leave to file a Third Amended Complaint. Plaintiffs seek unspecified compensatory damages and reimbursement for litigation expenses. On April 8, 2016, Defendants moved to dismiss the Third Amended Complaint, which the Court granted with prejudice on October 4, 2016. On November 2, 2016, Plaintiff's filed a notice of appeal. Dex Media intends to continue to honor its indemnification obligations and vigorously defend the allegations on behalf of Defendants.

Note 15 Subsequent Events

The term loan debt covenants require that the Company submit audited financial statements to the lenders no later than 120 days after the Company's year-end. This required the Company to complete its audited financial statements on or before April 30, 2018, which the Company was not able to achieve. The lenders amended the terms of this covenant prior to April 30, 2018, such that an additional 60 days was allowed for the Company's 2017 year-end audit. As of the issue date of these financial statements, this covenant, along with all other covenants were met.

We have evaluated all subsequent events through June 8, 2018, the date the consolidated financial statements were available to be issued.