Edgar Filing: INFOUSA INC

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infoUSA INC.

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K /A

Amendment No. 1

CURRENT REPORT

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

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): FEBRUARY 28, 2003

infoUSA INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


DELAWARE	0-19598	47-0751545
(STATE OR OTHER JURISDICTION OF	(COMMISSION FILE NUMBER)	(I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)		IDENTIFICATION NO.)

5711 SOUTH 86TH CIRCLE, OMAHA, NEBRASKA 68127
(Address of principal executive offices) (Zip Code)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (402)593-4500

NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)

TABLE OF CONTENTS


		REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
		Balance Sheets
		Statements of Operations
		STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY
		Statements of Cash Flows
		NOTES TO FINANCIAL STATEMENTS
		Pro Forma Consolidated Balance Sheet
		Pro Forma Consolidated Statement of Operations
		Notes to Unaudited Pro Forma Condensed Financial Statements
SIGNATURES
EXHIBIT INDEX
Ex-23.1 Consent of Independent Accountants

PAGE

Item 7.

Pro forma Financial Information and Financial Statements

(a) Financial Statements of Business Acquired.

1. Audited Financial Statements of Yesmail, Inc.:

Report of Independent Public Accountants

Balance Sheets as of December 31, 2002 and 2001, respectively

Statements of Operations for the years ended December 31, 2002 and 2001, respectively

Statements of Stockholders’ Deficit Equity for the years ended December 31, 2002 and 2001, respectively

Statements of Cash Flows for the years ended December 31, 2002 and 2001, respectively

Notes to Financial Statements

(b) Pro Forma Financial Information

Pro Forma Balance Sheet as of December 31, 2002

Pro Forma Statements of Operations for the years ended December 31, 2002 and 2001

16-17

Notes to Pro Forma Financial Statements

(c) Exhibits

23.1 Consent of Independent Accountants, filed herewith

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
Yesmail, Inc.:

We have audited the accompanying balance sheets of Yesmail, Inc. (a Delaware corporation) as of December 31, 2002 and 2001, and the related statements of operations, stockholders’ (deficit) equity and cash flows for each of the two years for the period ended December 31. These financial statements are the responsibility of the Company’s management. 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 of America. 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Yesmail, Inc. as of December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the two years for the period ended December 31, in conformity with accounting principles generally accepted in the United States of America.

/s/ O’Neill & Gaspardo

O’Neill & Gaspardo

Mokena, Illinois
May 2, 2003

Yesmail, Inc.
Balance Sheets


			December 31,

			2002			2001

Current assets:
	Cash and cash equivalents		$	1,483,809		$	1,874,831
	Accounts receivable, net of allowance of $754,000 and $1,088,000			2,725,267			5,874,196
	Notes receivable			7,597			16,186
	Deposits and prepaid expenses			214,071			161,983

		Total current assets		4,430,744			7,927,196

Property and equipment, net				2,317,114			3,262,208
Restricted cash				1,640,520			1,550,000

		Total assets	$	8,388,378		$	12,739,404
Current liabilities:
	Accounts payable		$	1,608,609		$	3,380,692
	Deferred revenue			186,675			111,692
	Due to CMGI			35,592,403			21,508,858
	Obligations under capital leases, current portion			576,222			2,583,817
	Accrued liabilities and other			1,095,958			2,547,369

		Total current liabilities		39,059,867			30,132,428
Obligations under capital leases, less current portion				—			596,279
Stockholders’ (deficit) equity:
	Preferred stock, $.01 par value; 5,000,000 shares authorized; 2,850,000 shares issued and outstanding			28,500			28,500
	Common stock, $.01 par value; 6,666,667 as of December 31, 2002 and 60,000,000 as of December 31, 2001 shares authorized; no shares issued and outstanding			—			—
	Additional paid-in capital			600,456,214			600,456,214
	Accumulated deficit			(631,156,203	)		(618,474,017	)

		Total stockholders’ (deficit) equity		(30,671,489	)		(17,989,303	)

		Total liabilities and stockholders’ equity	$	8,388,378		$	12,739,404

The accompanying report of independent public accountants and notes should be read in conjunction with this statement.

Yesmail, Inc.
Statements of Operations


			For the years ended December 31,

			2002			2001

Revenues			$	19,446,223		$	21,167,205
Cost of revenues				13,414,664			15,727,647

		Gross profit		6,031,559			5,439,558
Operating expenses:
	Sales and marketing			8,073,517			9,740,235
	Research and development			4,384,104			6,626,597
	General and administrative			3,330,622			4,050,922
	Fixed asset write-downs			—			547,323
	Restructuring			343,930			502,048
	Impairment of goodwill			406,552			784,589

		Total operating expenses		16,538,725			22,251,714

Operating loss				(10,507,166	)		(16,812,156	)
Other expense:
	Interest income (expense)			(2,119,906	)		(1,138,755	)
	Other			(54,720	)		(693,938	)

				(2,174,626	)		(1,832,693	)

		Total other (expense) income
		Net loss	$	(12,681,792	)	$	(18,644,849	)

The accompanying report of independent public accountants and notes should be read in conjunction with this statement.

Yesmail, Inc.

STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY


		Preferred Stock				Common Stock				Additional
										Paid In		Accumulated
		Shares		Amount		Shares		Amount		Capital		Deficit			Total

Balance at December 31, 2000			2,850,000	$	28,500		—	$	—	$	600,456,214	$	(599,829,168	)	$	655,546
	Net loss		—		—		—		—		—		(18,644,849	)		(18,644,849	)

Balance at December 31, 2001			2,850,000	$	28,500		—		—		600,456,214		(618,474,017	)		(17,989,303	)
	Other Adjustment		—		—		—		—		—		(394	)		(394	)
	Net loss		—		—		—		—		—		(12,681,792	)		(12,681,792	)

Balance at December 31, 2002			2,850,000	$	28,500		—	$	—	$	600,456,214	$	(631,156,203	)	$	(30,671,489	)

The accompanying report of independent public accountants and notes should be read in conjunction with this statement.

Yesmail Inc. and Subsidiary
Statements of Cash Flows


					For the years ended

					December 31,

					2002			2001

Cash Flows from Operating Activities:
Net loss					$	(12,681,792	)	$	(18,644,849	)
	Adjustments to reconcile net loss to net cash used in operating activities —
		Depreciation				1,983,039			2,329,284
		Goodwill write down				406,552			784,589
		Write-down of property and equipment				—			547,323
		Write-down of notes receivable				—			2,723,518
		Changes in operating assets and liabilities —
			Accounts receivable			3,019,379			1,767,932
			Notes receivable			8,589			(16,186	)
			Deposits and prepaid expenses			(52,088	)		438,102
			Accounts payable			(1,772,083	)		(1,155,536	)
			Deferred revenue			74,983			(487,388	)
			Accrued liabilities and other			(1,481,411	)		85,476

				Net cash used in operating activities		(10,494,832	)		(11,627,735	)
Cash Flows from Investing Activities:
	Purchases of property and equipment					(1,217,809	)		(141,705	)
	Acquisition of Post					—			(1,970,000	)

				Net cash used in investing activities		(1,217,809	)		(2,111,705	)
Cash Flows from Financing Activities:
	Proceeds from CMGI loan					14,083,545			16,824,778
	Restricted cash					(90,520	)		—
	Principal payments under capital lease obligations					(2,671,406	)		(2,155,963	)

				Net cash provided by financing activities		11,321,619			14,668,815

Net Increase (decrease) in Cash						(391,022	)		929,375
Cash and cash equivalents, beginning of year						1,874,831			945,456

Cash and cash equivalents, end of year					$	1,483,809		$	1,874,831

Supplemental Disclosure of Cash Flow Information:
	Cash paid during the period for interest				$	176,405		$	378,860

The accompanying report of independent public accountants and notes should be read in conjunction with this statement.

Yesmail, Inc.

NOTES TO FINANCIAL STATEMENTS

1. The company and description of business

Yesmail, Inc. (the “Company”) is an email marketing service provider of online relationship marketing solutions through a distinct suite of email customer acquisition and email customer relationship management (“CRM” or “retention”) services. Hundreds of leading online consumer and business-to-business direct marketers – either directly or through advertising agencies and list brokers – have relied on the Company’s comprehensive email service offerings to retain and develop additional revenue from their customers, and convert prospects to new customers. The Company is a wholly owned subsidiary of CMGI, Inc. (“CMGI”).

Marketed as a comprehensive email solution, the Company’s CRM and acquisition services operate as two business units with separate technology platforms and staffing teams. The CRM business unit utilizes ASP technology to deliver and track email, as well as perform campaign management, segmentation, personalization and reporting. Targeting “sophisticated, high tech / high touch” marketers that possess rich customer data and content for distribution, the Company’s CRM platform provides advanced technology for personalization and reporting with event-triggered messaging and real-time tracking. In addition to the ASP model, The Company clients are able to take advantage of the Company’s account management (program set-up, results analysis); message management (creative development, message production, quality assurance); and strategic consulting services.

The Company’s acquisition services include the Yesmail Network of more than 23 million permission-based contacts who have opted-in to receive promotions in more than 1,200 self-reported interest categories; an email brokerage business selling third-party branded email data to agencies and direct marketers; and a data sales team selling append, list enhancement and analytics products to the same market segments. A subset of eight million records (the Yesmail B2B Network) contains self-reported business interests through which data overlays support targeting by job title, function, industry, SIC code, number of business employees and annual revenue.

2. Summary of significant accounting policies

Cash and cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents.

Restricted cash

Restricted cash is held in a money market fund account as collateral for a letter of credit issued in connection with an operating lease.

Allowance for Doubtful Accounts

The Company reviews the outstanding accounts receivable at least once each quarter. The Company estimates the collectibility of each account based on prior experience with the client, recent developments in the client’s financial condition, current economic conditions and other relevant factors. If the account is deemed to be fully or potentially uncollectible, an allowance is established. In addition, an allowance is established based on the overall aging of the account receivable portfolio, historical experience and general economic conditions.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Property and equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets or, for leasehold improvements, the shorter of the lease term or the estimated useful life of the asset, as follows:


Computer equipment and software		1 — 3 years
Telephone equipment		2 — 5 years
Furniture and fixtures		5 — 7 years
Leasehold improvements		2 — 5 years

Maintenance and repairs are charged to expense as incurred and improvements and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the statement of operations for the period in which it is realized.

Income taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards (“SFAS No.109”), “Accounting for Income Taxes.” Under SFAS No.109, deferred tax assets and liabilities are determined based on temporary differences between the financial statement and tax bases of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

Revenue recognition

Acquisition Services

The Company generates revenue from the Yesmail Network and its brokerage operation by charging fees to its customers, generally on a cost per thousand (“CPM”) basis, for sending targeted emails to The Company’s managed and third-party databases. Revenue is recognized upon the execution of an email campaign. Revenue from data sales, primarily the Company’s data append product, is recognized on a net name basis, once files are matched and the corresponding append records are delivered to the client.

The Company generally becomes obligated to make payments to its Network Partners, which have contracted with the Company to be part of the YesMail Network, in the period the email messages are delivered. Such expenses are classified as cost of revenues in the statements of operations.

Retention Services

ASP clients are charged in one of two ways. In most instances clients are billed on the volume of emails monthly. Clients are billed at month end for that month’s activity. Revenue is recognized upon invoice. In other cases, clients are charged at month end based on the amount email addresses that are housed on the Yesmail platform. Revenue is recognized upon invoice. Most clients are charged a set up fee for the ASP system to integrate their email data into Yesmail’s platform. Revenue is recognized upon invoice.

The Company provides a variety of services including account management, message management, creative and client engineering for its email campaigns. These services and prices are typically outlined in client contracts. Clients are billed monthly either based on hourly estimates or on a fixed rate for service. Revenue is recognized upon invoice.

Research and development costs

Costs incurred in the development of its Web site, products, and related applications to be used in connection with the Company’s services have been expensed to operations as incurred through the year ended December 31, 2002. In March 1998, the American Institute of Certified Public Accountants issued Statement of Position (“SOP”) No. 98-1, “Software for Internal Use,” which provides guidance on accounting for the cost of computer software developed or obtained for internal use. The Company adopted SOP No. 98-1 on January 1, 1999. As a result, the Company has continued to expense its development costs as incurred as the rapid pace of technological change results in an estimated useful life of such software of one year or less.

Advertising

Marketing and advertising costs are charged to operations when incurred. This expense was $465,000 and $1,153,000 for the years ended December 31, 2002 and 2001, respectively.

Capital leases

The Company leases equipment under capital leases. Most of these capital leases contain unguaranteed residual amounts that would be owed by the Company to certain leasing companies, if the Company elected to retain the equipment under a specific lease. The Company’s policy is to review the Company’s utilization of this equipment currently and going forward prior to the end of the lease term in order to determine whether or not the equipment will be retained. The Company expenses any residual amounts at the time a decision has been made to keep equipment.

Financial instruments and concentration of risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, accounts receivable, accounts payable, short-term debt, obligations under capital leases and accrued liabilities. At December 31, 2002 and 2001, the fair market value of these instruments approximated their financial statement carrying amount because of the short term maturity of these instruments. The Company does not require collateral for accounts receivable, but does evaluate customer creditworthiness and establish allowances as necessary based on management estimates of collectibility. One customer represented 8% and 9% of revenues for the year ended December 31, 2002 and 2001, respectively.

Impairment of long-lived assets and long-lived assets to be disposed of

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Stock-based compensation

The Company accounts for stock-based compensation arrangements with employees in accordance with provisions of Accounting Principles Board (“APB”), Opinion No. 25, “Accounting for Stock Issued to Employees,” and complies with the disclosure provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.” Under APB No. 25, compensation expense is based on the difference, if any, on the measurement date, between the estimated fair value of the Company’s stock and the exercise price of options to purchase that stock or price paid for shares of stock. For directors and consultants receiving stock-based compensation, the Company complies with the provisions of SFAS No. 123.

3. Related party transactions

The Company provided CRM services to CMGI and recorded $50,425 in revenue for these services during 2002. The Company provided acquisition and CRM services to uBid, Inc.(“uBid”) a wholly-owned subsidiary of CMGI. The Company revenues associated with the services provided to uBid were $874,895 and $825,428 in 2002 and 2001, respectively.

4. Property and equipment

Property and equipment are summarized as follows:


	December 31,

	2002			2001

Computer equipment	$	4,554,632		$	4,235,198
Computer software		1,490,919			831,404
Telephone equipment		243,548			233,555
Furniture and fixtures		1,565,162			1,565,162
Leasehold improvements		452,203			418,554

		8,306,464			7,283,873
Accumulated depreciation		(5,989,350	)		(4,021,665	)

	$	2,317,114		$	3,262,208

Depreciation expense was $1,983,039 and $2,329,284 for the years ended December 31, 2002 and 2001 respectively.

5. Related party debt and secured demand note

CMGI provides cash funding and certain corporate services to the Company. These corporate services include legal, finance, human resources, rent and other administrative type services. All obligations associated with this funding and services including interest at a 7% interest rate are recorded within the Company’s financials. Total corporate services amounts were $14.1 million and $16.7 million for December 31, 2002 and 2001 respectively.

Associated with the debt outstanding to CMGI on November 1, 2000, the Company signed a secured convertible demand note with CMGI for $20 million. This note required the Company to pay CMGI on demand the lesser of the principal sum of $20 million or the aggregate unpaid principal amount of all advances hereunder together with accrued interest at a 7% per annum rate. This debt is convertible at the option of CMGI into series B convertible preferred stock at a $.01 par value per share equal to one-tenth of the quotient the aggregate amount of principal and interest outstanding at the time of conversion.

6. 401(k) savings plan

The Company is part of the CMGI 401(k) Savings Plan (the “Plan”) that covers substantially all employees. Under the Plan, employees are permitted to contribute a portion of gross compensation not to exceed standard limitations provided by the Internal Revenue Service. The Company maintains the right to match employee contributions, but for the years ended December 31, 2002 and 2001, the Company matched $133,815 and $250,411, respectively.

7. Commitments and contingencies

Leases

The Company leases office space and equipment under noncancelable operating and capital leases with various expiration dates through the year 2003. Rent expense was $ 1,742,042, and $ 1,333,337 for the years ended December 31, 2002 and 2001, respectively.

Future minimum lease payments under noncancelable capital leases as of December 31, 2002 are as follows:


	Capital
	Leases

2003	$	591,192
After 2003		—

Total minimum lease payments	$	591,192
Less — Amount representing interest		14,970

Present value of capital lease obligations		576,222
Less — Current portion		576,222

Long-term portion	$	—

In addition, sublease rental income amounted to $132,957 and $107,157 for the years ended December 31, 2002 and 2001, respectively.

Litigation

The Company is a defendant in a lawsuit filed by a former shareholder. The suit seeks damages totaling $2,823,362, which she alleges is her loss in stock value because delays caused by the Company and CMGI prevented sale. Outside counsel for the Company has advised that at this stage in the proceedings he cannot offer an opinion as to the probable outcome. In addition, the Company believes that adequate insurance coverage exists to cover any payment of damages. Therefore, no provision for loss has been recorded.

It has been alleged that the Company received preferential payments from customers prior to bankruptcy filings. The claims total $237,821. Outside counsel for the Company has advised that at this stage in the proceedings he cannot offer an opinion as to the probable outcome. In addition, the Company believes the suits are without merit and is vigorously defending its position. Therefore, no provision for loss has been recorded.

Additionally, the Company is subject to other pending and threatened legal actions and proceedings. After reviewing other pending and threatened actions and proceedings with counsel, management believes that the outcome of such actions or proceedings is not expected to have a material adverse effect on the financial position or results of operations of the Company.

Audit Rights of network partners

Many of the Company’s network partners reserve the right to audit the revenue sharing payments they receive from the Company. The Company believes that any additional obligation resulting from these audits, if conducted, will not have a significant impact on the Company.

Guarantees

The Company had commitments to certain third parties that guaranteed revenue during 2001. These commitments expired during 2001.

Letter of Credit

A letter of credit of $1,495,337 is outstanding that expires on February 28, 2003.

8. Prior impairment losses on goodwill and intangible assets

In conjunction with the purchase of the Company by CMGI in March 2000, the Company recorded goodwill and intangible assets of $589,140,779. Impairment losses for the full amount of these assets were recorded in 2000 based on declining values of similar technology stocks and performance shortfalls at the Company.

9. Business combination

On December 7, 2001, the Company purchased certain assets of Post Communications Inc. Accordingly, the results of operations for Post Communications Inc. have been included in the accompanying financial statements from that date forward. The acquisition was made for the purpose of expanding the Company’s retention service offering.

The aggregate acquisition price was $1,970,000 in cash plus $131,000 in transaction costs. Following is a condensed balance sheet showing the fair values of the assets acquired and the liabilities assumed as of the date of the acquisition:


Current assets		$	1,084,840
Property and equipment			1,000,424
Goodwill arising in the acquisition			784,589

	Total assets		2,869,853
Current liabilities			899,853
Long-term debt			—

	Total liabilities		899,853

Net assets acquired		$	1,970,000

The goodwill recorded above was considered impaired in 2001. Therefore, an impairment loss for the full amount was recorded in 2001.

During 2002, additional information indicated that the assets included in the transaction had been improperly valued. As a result, $406,552 was added to goodwill and expensed as impaired in 2002. Included within this amount were transaction costs of $30,000.

10. Income taxes

Utilization of a portion of the net operating loss carryforwards may be limited. Due to the uncertainty regarding the ultimate utilization of the net operating carryforwards, the Company has not recorded any benefit for losses and a valuation allowance has been recorded for the entire amount of the net deferred tax asset.

11. Stockholders’ (deficit) equity

Preferred Stock

On April 18, 2000, CMGI authorized 5,000,000 shares of undesignated preferred stock at a $.01 par value per share that may be issued from time to time by the Company’s board of directors of which 2,850,000 shares are designated as series A convertible preferred stock.

Common stock

On July 31, 2000, CMGI authorized 60,000,000 shares of common stock at $.01 par value per share. On February 22, 2002, CMGI agree to a 9 to 1 stock split that reduced the number of shares of common stock authorized to 6,666,667.

Stock option plan

On February 22, 2002, CMGI authorized 6,500,000 stock options to Company employees at a strike price of $.24 based on the Company’s valuation of $10 million as of January 31, 2002. These options vest at 33% after the first year and then monthly over the next two years for the remaining 67% of the option pool.

12. CMGI stock option plan

The Company is part of CMGI’s Employee Stock Purchase Plan (the “Purchase Plan”) which provides employees with an opportunity to purchase common stock through accumulated payroll deductions up to a maximum of $25,000 in fair market value of such stock within the same calendar year. Under the Purchase Plan, employees may purchase the common stock at a price equal to 85% of the fair market value of the common stock on the first or last day of the offering period, whichever is lower.

13. Restructuring and Impairment Charges

In 2001, the Company recorded a write-down of fixed assets of $547,323 based on the Company’s under utilization of certain fixed assets in operations.

In 2002 and 2001, the company recorded a restructuring charge of $343,930 and $502,048, respectively. These restructuring charges were for severances for terminated employees during 2002 and 2001.

14. Subsequent Events

Office lease termination

On February 28, 2003, the Company terminated its Chicago office lease agreement with the Company’s landlord for the Company’s space at 222 Riverside Plaza, 17th floor for $1,500,000, certain furniture and fixtures with a net book value at February 28, 2003 of $313,312, and rental payments of approximately $90,000 per month through May 2003.

Merger with Corporate T, Inc, a wholly owned subsidiary of infoUSA, Inc.

On February 28, 2003, the company merged with Corporate T, Inc. Total consideration for the acquisition included cash of $5.0 million. The transaction is subject to a purchase price adjustment for finalized working capital and a two-year escrow for other contingent items specific within the merger agreement. The Company’s stock option plan was terminated as a part of this transaction. The amount of $35.2 million owed to CMGI as of February 28, 2003 was forgiven.

Unaudited Pro Forma Consolidated Financial Statements

The following unaudited pro forma consolidated balance sheet and statements of operations give effect to the purchase transaction pursuant to a Merger Agreement as of February 28, 2003 by and among infoUSA Inc. (“infoUSA”) Corporate T, Inc., CMGI, Inc. and Yesmail, Inc. (“Yesmail”). This business combination is accounted for using the purchase method of accounting.

Pro forma adjustments and the assumptions on which they are based are described in the accompanying footnotes to the pro forma consolidated financial statements. The accompanying pro forma consolidated balance sheet as of December 31, 2002 contains those pro forma adjustments necessary to reflect the business combination as if it was consummated on that date. The accompanying pro forma consolidated statements of operations for the years ended December 31, 2002 and 2001 contain those pro forma adjustments necessary to reflect the business combination as if it was consummated on January 1, 2001. The unaudited pro forma consolidated financial statements are based upon the historical financial statements of infoUSA and Yesmail and should be read in conjunction with those financial statements and notes thereto appearing in infoUSA’s 2002 Form 10-K. The unaudited pro forma consolidated financial data do not purport to be indicative of the results which would have actually been attained had the business combination been consummated on the dates indicated or of the results which may be expected to occur in the future.

May 14, 2003

infoUSA INC.

Pro Forma Consolidated Balance Sheet
For the year ended December 31, 2002
(Amounts in thousands, except per share amounts)


				Historical			Historical			Pro Forma						Pro Forma
				infoUSA			Yesmail			Adjustments			Note			Combined

ASSETS
	Current Assets
		Cash and cash equivalents		$	6,285		$	1,484		$	(5,000	)		(a	)	$	2,769
		Restricted cash			0			1,641			(1,550	)		(b	)		91
		Marketable securities			887			—			—						887
		Trade accounts receivable, net			39,352			2,725			(136	)		(c	)		41,941
		Officer note receivable			510			—			—						510
		List brokerage trade receivable			16,635			—			—						16,635
		Prepaid expenses			4,515			222			—						4,737
		Deferred marketing costs			1,746			—			—						1,746

			Total current assets		69,930			6,072			(6,686	)					69,316

	Property and equipment, net				45,756			2,317			(855	)		(d	)		47,218
	Intangible assets, net				273,246			—			2,984			(e	)		276,230
	Other assets				4,454			—			—						4,454

				$	393,386		$	8,389		$	(4,557	)				$	397,218

LIABILITIES AND STOCKHOLDERS’ EQUITY
	Current Liabilities
		Current portion of long term debt		$	26,312		$	576		$	—					$	26,888
		Accounts payable			13,303			1,609			(136	)		(c	)		14,776
		List brokerage trade payable			12,745			—			—						12,745
		Accrued payroll expenses			11,410			649			500			(f	)		12,559
		Accrued expenses			1,827			447			—						2,274
		Due to parent company			0			35,592			(35,592	)		(g	)		—
		Income taxes payable			3,287			—			—						3,287
		Deferred revenue			13,821			187			—						14,008
		Deferred income taxes			515			—			—						515

			Total current liabilities		83,220			39,060			(35,228	)					87,052

	Long term debt, net of current portion				164,116			—			—						164,116
	Deferred income taxes				21,722			—			—						21,722
	Deferred revenue				6,000			—			—						6,000
	Stockholders’ equity
		Preferred stock			0			29			(29	)		(g	)		—
		Common stock			130			—			—						130
		Paid-in capital			92,205			600,456			(600,456	)		(g	)		92,205
		Retained earnings (deficit)			32,237			(631,156	)		631,156			(g	)		32,237
		Treasury stock			(4,538	)		—			—						(4,538	)
		Notes receivable from officers			(834	)		—			—						(834	)
		Accumulated other comprehensive loss			(872	)		—			—						(872	)

			Total stockholders’ equity		118,328			(30,671	)		30,671						118,328

				$	393,386		$	8,389		$	(4,557	)				$	397,218

See accompanying notes to pro forma consolidated financial statements.

Pro Forma Consolidated Statement of Operations
For the year ended December 31, 2002
(Amounts in thousands, except per share amounts)


		Historical			Historical			Pro Forma						Pro Forma
		infoUSA			Yesmail			Adjustments			Notes			Combined

Net sales		$	302,516		$	19,446		$	(4,869	)		(h	)	$	317,093
Costs and expenses:
	Database and production costs		84,710			16,166			(4,869	)		(h	)		96,007
	Selling, general and administrative		131,985			11,052			—						143,037
	Depreciation and amortization		28,083			1,984			—						30,067
	Non-cash stock option compensation		52			—			—						52
	Restructuring charges		2,531			344			—						2,875
	Goodwill write-off		—			407									407
	Litigation settlement charges		417			—			—						417
	Acquisition costs		181			—			—						181

	Total costs and expenses		247,959			29,953			(4,869	)					273,043

Operating income (loss)			54,557			(10,507	)		—						44,050

Other income (expense):
	Investment income		179			—			—						179
	Other charges		(5,528	)		(55	)		—						(5,583	)
	Interest expense		(16,059	)		(2,120	)		—						(18,179	)

Income (loss) before income taxes			33,149			(12,682	)		—						20,467
Income taxes			12,713			—			—						12,713

Income (loss)		$	20,436		$	(12,682	)	$	—					$	7,754

Basic earnings (loss) per share:
Income (loss)		$	0.40		$	(0.25	)	$	—					$	0.15

Average shares outstanding			51,170			51,170			51,170						51,170

Diluted earnings (loss) per share:
Income (loss)		$	0.40		$	(0.25	)	$	—					$	0.15

Average shares outstanding			51,193			51,193			51,193						51,193

See accompanying notes to pro forma consolidated financial statements.

Pro Forma Consolidated Statement of Operations
For the year ended December 31, 2001
(Amounts in thousands, except per share amounts)


		Historical			Historical			Pro Forma						Pro Forma
		infoUSA			Yesmail			Adjustments			Notes			Combined

Net sales		$	288,738		$	21,167		$	(9,548	)		(i	)	$	300,357
Costs and expenses:
	Database and production costs		80,880			20,722			(9,548	)		(i	)		92,054
	Selling, general and administrative		112,402			13,093			—						125,495
	Depreciation and amortization		48,127			2,330			—						50,457
	Non-cash stock option compensation		448			—			—						448
	Restructuring charges		4,899			502			—						5,401
	Fixed asset write-downs					547									547
	Goodwill write-off		—			785									785
	Litigation settlement charges		1,104			—			—						1,104
	Acquisition costs		493			—			—						493

	Total costs and expenses		248,353			37,979			(9,548	)					276,784

Operating income (loss)			40,385			(16,812	)		—						23,573

Other income (expense):
	Investment income		953			—			—						953
	Other charges		—			(694	)		—						(694	)
	Minority interest		282			—			—						282
	Interest expense		(25,285	)		(1,139	)		—						(26,424	)

Income (loss) before income taxes			16,335			(18,645	)		—						(2,310	)
Income taxes			11,371			—			—						11,371

Income (loss)		$	4,964		$	(18,645	)	$	—					$	(13,681	)

Basic earnings (loss) per share:
Income (loss)		$	0.10		$	(0.37	)	$	—					$	(0.27	)

Average shares outstanding			50,651			50,651			50,651						50,651

Diluted earnings (loss) per share:
Income (loss)		$	0.10		$	(0.37	)	$	—					$	(0.27	)

Average shares outstanding			50,651			50,651			50,651						50,651

See accompanying notes to pro forma consolidated financial statements.

Notes to Unaudited Pro Forma Condensed Financial Statements
(Amounts in thousands)

(1) BASIS OF PRESENTATION

The unaudited pro forma consolidated balance sheet reflects the historical financial position of infoUSA Inc. (“infoUSA”) and Yesmail, Inc. (“Yesmail”) at December 31, 2002, with pro forma adjustments as if the business combination had taken place on December 31, 2002. The unaudited pro forma consolidated statements of operations for the years ended December 31, 2002 and 2001 reflect the historical results of operations of infoUSA and Yesmail, with pro forma adjustments based on the assumption the business combination was effective January 1, 2001.

(2) DESCRIPTION OF TRANSACTION

On February 28, 2003, Yesmail merged with Corporate T, Inc. a wholly owned subsidiary of infoUSA. Consideration for the merger was $5.0 million in cash, which was funded through existing cash. The acquisition is accounted for using the purchase method of accounting. The aggregate purchase price of the acquisition has been allocated based upon management’s best estimate of the fair value of identifiable assets and liabilities of Yesmail at the date of acquisition as follows:


Current assets		$	4,386
Property and equipment, net			1,462
Goodwill			2,984
Current liabilities			(3,832	)

	Total	$	5,000

(3) PRO FORMA ADJUSTMENTS TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Pro Forma Adjustments to Financial Statements

A summary of pro forma adjustments required to give effect to the acquisition of Yesmail as of December 31, 2002 and 2001 are as follows (in 000’s):

	(a)		Cash — An entry has been made to reduce cash by the $5 million purchase price.

	(b)		Restricted Cash — An entry has been made to reduce restricted cash by $1,550 used in a real estate settlement with Yesmail’s landlord at the time of acquisition.

	(c)		Intercompany receivables and payables — An entry has been made for $136 to remove receivables and payables with WalterKarl/infoUSA.

	(d)		Fixed asset reduction — An entry has been made to reduce Yesmail’s fixed assets by $855 for Chicago office fixed assets that were part of Yesmail’s settlement with landlord.

	(e)		Goodwill — An entry has been made to record goodwill of $2,984 as a part of purchase accounting.

	(f)		Purchase accounting accrual — infoUSA has recorded an accrual for severance of $500 to be paid to terminated Yesmail employees.

	(g)		Payable to Yesmail’s former Parent Co. & Stockholders’ Equity — An entry has been made for $35,592 to remove Yesmail’s payable amount to CMGI, since this amount was forgiven in the acquisition. Entries have been made to eliminate the $29 in preferred stock, the paid-in capital ($600,456) and accumulated deficit $631,156 of Yesmail in consolidation.

	(h)		Inter-company sales and change in financial reporting — An entry has been made to reduce $238 in sales and costs between Yesmail and infoUSA during 2002. Yesmail’s sales and costs have been reduced by $4,631 in 2002 to record Yesmail’s brokerage sales on a net basis which is consistent with infoUSA’s financial reporting.

	(i)		Change in financial reporting — Yesmail’s sales and costs have been reduced by $9,548 in 2001 to record Yesmail’s brokerage sales on a net basis which is consistent with infoUSA’s financial reporting.

SIGNATURES

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

infoUSA Inc.
(Registrant)


Date: May 14, 2003	By:	/s/ STORMY L. DEAN

		Stormy L. Dean, Chief Financial
		Officer (for Registrant and as
		Principal Financial Officer)

EXHIBIT INDEX

EXHIBIT

DESCRIPTION

Consent of Independent Accountants, filed herewith.