infoUSA Reports Record Revenue and Strong Results for Q1 2005

    Business Editors

    OMAHA, Neb.--(BUSINESS WIRE)--April 25, 2005--infoUSA(R) (Nasdaq:IUSA):

(amounts in thousands, except per share amounts) 1st Quarter 1st Quarter 2004 2005 ---------------------------------------------------------------------- Net sales $80,811 $95,095(a) ---------------------------------------------------------------------- EBITDA (see table on income statement) 16,028 25,222(a) Operating income 9,211 15,590(a) Net income 4,373 9,058 Diluted earnings per share 8 cents 17 cents ----------------------------------------------------------------------

---------------------------------------------------------------------- Total debt 173,485 199,781 Capital expenditures (see table) 2,103 1,956 Cash flow from operations 16,143 10,745 ----------------------------------------------------------------------

(a) These figures were negatively impacted by approximately $3 million related to the acquisition accounting impact related to OneSource revenue and conversion of a portion of infoUSA Group business to subscription format.

    RESULTS OF OPERATIONS

    Vin Gupta, Chairman and CEO, infoUSA, said, "During first quarter of 2005, we achieved record revenue of $95.1 million with strong operating margins. We were able to grow our revenue through: (i) sale of our recently launched subscription products and (ii) successful integration of our recent acquisitions. We generated this revenue growth while at the same time achieving an EBITDA margin of 27%, which represents a 7 percentage point improvement over last year's first quarter results. The growth in revenue, along with continued cost controls, enabled us to achieve these higher margins, positioning us well to reach our long-term EBITDA margin goal of 33%."
    Gupta continued, "Our first quarter reported EBITDA was $25.2 million or 27% of revenue. Reported revenue and EBITDA were negatively impacted by approximately $3.0 million as follows: (i) non-recognizable deferred revenue from the OneSource acquisition of $1.2 million and (ii) deferral of approximately $1.8 million of revenues from accounting for our subscription product revenue. Free cash flow (cash flow from operations less capital expenditures) for fiscal first quarter was $8.8 million. This free cash flow was impacted by normal fluctuations in our working capital accounts, which include a decrease in payables, an increase in receivables, payment of our annual income taxes, and the timing of other cash collection accounts. Our GAAP earnings per share for first quarter were 17 cents, exceeding the estimates of our Wall Street research analysts. These results have positioned us well to meet or exceed our previous revenue and EPS guidance for fiscal 2005."
    Gupta added, "We were pleased with our first quarter performance. Our roll-out of subscription products is proceeding better than anticipated, and is gaining acceptance among small businesses, entrepreneurs, and sales people. We were successful in growing our subscription base while keeping our cancellation rates below 10%. Our strategy of migrating small business customers from one-time purchasers of sales leads to a subscription based service will be a gradual process but a key growth driver for infoUSA."
    "We continue to build a strong pipeline of business company-wide, as evidenced by our deferred revenue of $52.6 million on the balance sheet as of March 31, 2005. In addition, we had an incremental $51 to $56 million of billings at the end of the fiscal first quarter, which represent future invoicing to our customers with signed contracts. This combination of a solid pipeline and billings indicates growing demand for our products."
    "I am pleased to report that our infrastructure upgrade project is proceeding at full speed. We expect that the migration from an outsourced mainframe-based infrastructure to a combined in-house mainframe and server environment will increase productivity and reduce costs. As a result, we plan to significantly reduce our data processing hardware and software costs by over $5 million per year starting in fiscal 2006."
    Gupta continued, "We continue to strengthen our balance sheet by reducing leverage. We are in the process of re-financing our existing credit facilities to achieve lower interest rates and more flexibility in our capital structure. During first quarter, our Board declared and paid out dividends of 20 cents per share to our shareholders for the first time in our history."
    Gupta concluded, "We continue to add value to our products and services. Our OneSource subsidiary plans to use proprietary search technology to deliver important company web site information to its customers. This technology will enable customers to go deep into the business web sites and search by detailed criteria, such as 'customized chip manufacturers' or 'importers of artificial roses'. With the seamless integration of our acquired companies, we have expanded our multi-channel marketing, offering an integrated suite of databases, database marketing and email marketing solutions."

    OUTLOOK FOR FISCAL 2005

    Based on the revenue growth initiatives in its infoUSA Group and early acquisition integrations in its Donnelley Group, infoUSA management is optimistic about continuing to execute on its current product and marketing strategies to drive organic revenue growth while producing healthy EBITDA margins and earnings per share. During 2005, the accounting impact related to OneSource revenue and subscription products will total less than $6 million. The company is re-confirming its previous guidance for 2005 revenues, EBITDA, and earnings per share as follows: (i) GAAP revenues for fiscal 2005 is projected to be approximately $390 million to $400 million; (ii) EBITDA for fiscal 2005 is projected to be approximately $98 million to $102 million; and (ii) GAAP earnings per share for fiscal 2005 is projected to be approximately 63 cents to 67 cents. The company is maintaining its previous guidance for 2005 free cash flow to be approximately $68 million to $72 million.

    Conference Call

    The company will host its first quarter conference call on April 26th, at 4:00 PM Eastern time. To access the conference call, please dial 866/800-8651, passcode #87069442, approximately 10 minutes prior to the start of the call. A replay of the call will be available from 6:00 PM Eastern time, April 26th, through midnight Eastern Time, May 3rd. The replay number is 888/286-8010, passcode #31572474. A live webcast of the conference call will be available at the company's Investor Relations web site, http://ir.infousa.com.

    About infoUSA

    infoUSA (www.infoUSA.com), founded in 1972, is the leading provider of business and consumer information products, database marketing services, data processing services and sales and marketing solutions. Content is the essential ingredient in every marketing program, and infoUSA has the most comprehensive data in the industry, and is the only company to own a proprietary database of 250 million consumers and 14 million businesses under one roof. The infoUSA database powers the directory services of the top Internet traffic-generating sites. Nearly 3 million customers use infoUSA's products and services to find new customers, grow their sales, and for other direct marketing, telemarketing, customer analysis and credit reference purposes. infoUSA headquarters are located at 5711 S. 86th Circle, Omaha, NE 68127 and can be contacted at (402) 593-4500.

    Statements in this announcement other than historical data and information constitute forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those stated or implied by such forward-looking statements. The potential risks and uncertainties include, but are not limited to, recent changes in senior management, the successful integration of recent and future acquisitions, fluctuations in operating results, failure to successfully carry out our Internet strategy or to grow our Internet revenue, effects of leverage, changes in technology and increased competition. More information about potential factors that could affect the company's business and financial results is included in the company's filings with the Securities and Exchange Commission.

infoUSA INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)

FOR THE QUARTER ENDED --------------------- March 31, March 31, 2004 2005 ---------- ---------- (unaudited) Net sales $80,811 $95,095 Costs and expenses: Database and production costs 23,861 26,027 Selling, general and administrative 40,179 44,398 Depreciation 3,314 3,908 Amortization of intangible assets 3,446 4,404 Non-cash stock compensation 182 (289) Restructuring costs 615 703 Acquisition costs 3 354 ---------- ---------- 71,600 79,505 ---------- ----------

Operating income 9,211 15,590

Other income (expense): Investment income (loss) 201 1,320 Other charges (144) 0 Interest expense (2,214) (2,740) ---------- ----------

Income before income taxes 7,054 14,170 Income taxes 2,681 5,112 ---------- ----------

Net income $4,373 $9,058 ========== ========== BASIC & DILUTED EARNINGS PER SHARE: Basic earnings per share $0.08 $0.17 ========== ========== Diluted earnings per share $0.08 $0.17 ========== ========== Basic weighted average shares outstanding 52,338 53,798 ========== ========== Diluted weighted average shares outstanding 52,955 53,841 ========== ==========

The following provides a reconciliation of net income to EBITDA:

FOR THE QUARTER ENDED March 31, March 31, 2004 2005 --------- --------- Net income $4,373 $9,058 Interest expense 2,214 2,740 Income taxes 2,681 5,112 Depreciation 3,314 3,908 Amortization of intangible assets 3,446 4,404 --------- --------- EBITDA $16,028 $25,222 ========= =========

The following provides a schedule of Capital Expenditures:

FOR THE QUARTER ENDED March 31, March 31, 2004 2005 --------- --------- Purchases of Property of Equipment $1,651 $1,161 Software and Database Development Costs 452 795 --------- --------- Capital Expenditures $2,103 $1,956 ========= =========

The following provides a reconciliation of Cash Flow from Operations to Free Cash Flow:

FOR THE QUARTER ENDED March 31, March 31, 2004 2005 --------- --------- Cash Flow from Operations $16,143 $10,745 Less: Capital Expenditures (2,103) (1,956) --------- --------- Free Cash Flow $14,040 $8,789 ========= =========

infoUSA INC. AND SUBSIDIARIES Selected Balance Sheet Amounts (In thousands, except per share amounts)

The following table presents selected balance sheet account information as of March 31, 2005, compared to December 31, 2004.

(amounts in thousands) December 31, March 31, 2004 2005 ---------------------------------------------------------------------- Assets ---------------------------------------------------------------------- Cash and Cash Equivalents $10,404 $4,295 Accounts Receivable 51,707 47,214 Accounts Receivable-List Brokerage 19,635 19,041 Deferred Marketing Costs 2,632 3,679 Property and Equipment, net 42,537 42,850 Intangible Assets, net 365,286 364,810

---------------------------------------------------------------------- Liabilities ---------------------------------------------------------------------- Accounts Payable 21,268 16,964 Accounts Payable-List Brokerage 15,427 15,006 Accrued Payroll Expenses 15,917 16,263 Accrued Expenses 7,028 5,652 Deferred Revenue 53,034 52,604 Total Debt 196,226 199,781 ----------------------------------------------------------------------

--30--HB/ms*

CONTACT: infoUSA, Omaha Vin Gupta, 402-596-8900 Fax: 402-339-0265 E-Mail: vin.gupta@infoUSA.com or Raj Das, 402-593-4517 Fax: 402-339-0265 E-Mail: raj.das@infoUSA.com or Investor Relations: Laurel Gupta, 402-593-4535 Fax: 402-339-0265 E-Mail: laurel.gupta@infousa.com

KEYWORD: NEBRASKA INDUSTRY KEYWORD: HARDWARE ADVERTISING/MARKETING SOFTWARE INTERNET E-COMMERCE EARNINGS CONFERENCE CALLS SOURCE: infoUSA

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