Good morning, and welcome to Dex One Corporation's Second Quarter 2011 Results Conference Call. [Operator Instructions] Please note that today's call is being recorded, as well as webcast live over the company's website at www.dexone.com. I would now like to turn the call over to Mr. Tyler Gronbach. Sir, you may begin.

Thank you, Julie. Good morning, and thank you for joining us today. We will begin this morning with comments from Dex One Chief Executive Officer, Alfred Mockett; and Chief Executive -- Chief Financial Officer, Steve Blondy. Following their comments, we will then have time for your questions. I would like to remind everyone, certain statements made today may be forward-looking as defined by the Private Securities Litigation Reform Act. We call your attention to our news release for the quarter ended June 30, 2011, and the company's Form 8-K furnished to the SEC this morning. These documents discuss second quarter 2011 results, and the 8-K also includes the results information package, which provides additional information pertaining to the quarter. We encourage you to review these materials and the company's other periodic filings with the SEC, which set forth important risks and other factors that could cause actual results to differ materially from those contained in or suggested by any forward-looking statements. Electronic versions of Dex One's SEC filings can be obtained by contacting us or by visiting dexone.com or the SEC's website at sec.gov. Copies of the news release and results information package can also be found under the Investor Relations tab at our website. Commencing on February 1, 2010, the company adopted fresh start accounting and as required under GAAP, which had a significant impact on the reported results of operations in that year. These reported results were not indicative of our underlying operating and financial performance and are not comparable to any prior or subsequent period presentation. During the call today, we will refer to certain adjusted figures that are non-GAAP financial measures. In the current period, such items include: expenses, EBITDA, free cash flow and net debt. Some of these figures exclude impairment charges, stock-based compensation and long-term incentive program expenses, fair value adjustments and other items. Additional information about non-GAAP financial measures, as well as a reconciliation between these items and the comparable GAAP measures can be found in the press release and related 8-K furnished to the SEC. One final reminder, this call is the property of Dex One Corporation and any retransmission or broadcast without the expressed consent of the company is strictly prohibited. It is now my pleasure to turn the call over to Alfred.

Thank you, Tyler, and good morning. In the second quarter, we made significant progress in support of our strategic priorities, and we continue to transform our operations to better address the rapidly shifting marketing needs of local business. First, we expanded our digital capabilities from both a product and a partnership perspective. Second, we continue to streamline our business operations. And finally, we again posted solid EBITDA and free cash flow in the quarter, but also raised our full year guidance for these 2 key metrics. Today, I'll provide comments and context for quarterly sales and discuss our outlook for the third quarter. Steve will review financial highlights and updated 2011 guidance. Following Steve's comments, we will address your questions. Market conditions remain challenging and local businesses are still waiting for improvements in the local economy. Against this backdrop, ad sales declined 14.6% for the quarter, consistent with last year and in line with expectations. Bookings declined 15%, reflecting a similar trend to what we'd experienced in the same period a year ago. The results for the quarter were impacted by reduced customer counts and lower average spending. However, new sales initiatives are delivering modest improvements in these areas. Our net customer loss abated 29%, the best rate in nearly 2 years. Digital solutions and services are now generating more than 14% of total sales. In addition, new customers' average digital investment is approximately 30% of their total spend. This is in line with next year's digital weighting goal. Our Dex Guaranteed Actions and integrated service bundles are driving double-digit increases in spending with existing customers and 60% of our patch averaged single digit declines. Aside from these developments, the positive trends we highlighted on our previous investor call continued in the second quarter. Smaller markets, which comprise the majority…

Thank you, Alfred, and good morning, everyone. This quarter, we once again generated strong EBITDA and free cash flow, maintaining the best margins in the industry and a healthy 60% cash conversion rate. Q2 revenue came in at $377 million. Expenses of $220 million included $9 million of restructuring charge. Excluding restructuring, Q2 expenses were down $29 million versus Q2 last year, primarily due to lower headcount, selling costs and optimized digital operations. First half net cost savings of $58 million give us confidence to increase our 2011 cost savings bogey and reset EBITDA guidance to the high end of our previous range. Q2 bad debt expense of $15 million was 3.9%, bringing our first half bad debt rate to 3.1%, well within the 3% to 4% range we expect for the full year. Q2 EBITDA of $157 million represents a 42% margin. Subtracting $41 million for cash interest, $10 million for CapEx, $8 million for working capital and $6 million for cash taxes, derived Q2 free cash flow of $93 million. During the quarter, all of our free cash flow reduced net debt, bringing our June 30 balance to $2.5 billion, with a weighted average rate of 7.3%. Leverage was 3.4x and we maintain ample cushions across all our covenants. We also impaired our remaining goodwill in the quarter. This does not impact the company's current or future cash flow, compliance with debt covenants or tax attributes. Average sales per customer of $3,700 was down 6% versus last year and Q2 ad sales decline of 15% was comprised of a 19% loss on recurring sales offset by new business gains of 4%. Looking ahead, we're updating 2011 guidance. Given we're about 80% through our 2011 ad sales publishing cycle, we have enough visibility into revenue to narrow our outlook to $1.475 billion to $1.50 billion. Meanwhile, good progress on our year-to-date expense management leads us to increase our net cost savings for the year from $100 million to $125 million and likewise, increase EBITDA guidance to the top end of the previous range or $625 million to $650 million. Turning to cash flow outlook. Our tax planning strategies have reduced expected 2011 cash taxes by approximately $50 million. Between the improved EBITDA and lower cash tax outlook, free cash flow guidance for 2011 is now $375 million to $400 million compared to $300 million to $350 million previously. We now expect net debt at year end to be approximately $2.35 billion, down from $2.4 billion previously due to higher free cash flow. Before moving to Q&A, I want to thank Alfred and our Board of Directors for the privilege to serve as CFO of Dex One. I appreciate having been a member of the leadership team, and I wish them the very best. Operator, we are now ready for questions.

[Operator Instructions] Your first question comes from Jason Alper, BTIG.

I had a question regarding your graphics for bookings and ad sale prints. Up until last quarter, you were adjusting for the impact of the CMR. [Technical Difficulty]

I was trying to ask a question about the graphic on the bookings and asset trends on page -- I guess, Page 2 of your slide deck. Up until last quarter, you were adjusting for the impact of the CMR, has that impact abated because I notice that it wasn't on this quarter's slide deck?

Okay. Yes. It has abated. It was roundabout 1% for Q2, so we would have had a 13.6% decline rather than 14.6%, and there's going to be minimal effect going forward after that.

Okay, and then on the bookings side, it doesn't seem like we're making any sort of leaps and bounds in the positive direction at the moment. Are you still -- I know earlier in the year, you had made a comment about second half of 2012 being 0 growth or positive growth. Are you still sticking to that or has something changed?

No, we're still sticking to turning into positive growth by the end of 2012 and to having a 30% digital sales, so I'm quite happy to reaffirm those 2 commitments. With regard to the bookings, Q2 has not had the benefit of any of the new product introductions. We're now selling into basically Q4 and Q1 of next year, and so as we're starting to round out the digital portfolio and we're getting traction with bundles and with DGA, that's where we'll really see the benefit.

Okay, and as far as your product rollouts, you obviously went through some of those, and are there more in the pipeline that we haven't heard about yet? How does that stand?

Well, there are more, as I had mentioned, high-end SEM to -- for our larger customers, mobile display ads and social media, those are the principal ones. It's around a very tightly focused strategy of just garnering a larger share of spend of our customers' wallet. We want to do a few big things really well in building the portfolio.

And how are those new products that you've just recently announced being received so far?

Well, we're very pleased with DGA and bundles, and in fact, we're getting higher retention rates and we're also getting double-digit bumps in the average spend of the customers that are taking the bundles in DGA.

Okay, and with regards to the Google partnership, how is that making a difference in your sales at the moment?

Well, of course, we only find it a few weeks ago, and we have an ongoing relationship with them. Once again, that is for our sales into Q4 and Q1 next year.

Right. I was more interested in customer response, is it giving you a means to battle from competitors that may have otherwise been taking market share from you?

Yes, I put it a slightly different way. We could only sell to our customers that, which they give us permission to sell. They look at our core competencies and range of capabilities and will allow us to sell within that envelope. So what that does, it expands the envelope of capabilities, it's almost like a, sort of a reinforcement of our digital credentials.

Okay. I was also hoping you could comment on the search for Mr. Blondy's replacement, I was wondering how that was going?

Well, the search is well advanced, and I would hope to have an announcement shortly. But as with all these things with search it inevitably takes just a little bit longer than you anticipated.

Your next question comes from Lance Vitanza, CRT Capital.

Actually, this is Kyle Okita filling in for Lance. Just a quick start, a quick question on the difference between the $220 million of adjusted expenses in the slide show and the $222 million of expenses in the press release. Now I know you also said you had $9 million of restructuring expenses in Q2. I was just trying to sort of reconcile those 3 numbers.

Okay, hang on a second. What did you say, it was $222 million in the press release?

Yes.

$222 million, you know what, Kyle, let me get back to you about that. Yes, I'm not sure what the -- I think in the press release that includes the FAS 123R expense and the LTI, whereas the expenses that we show in the slides exclude those amounts, but let me confirm that with you. Okay?

Okay. Okay, we can come back to that or follow-up later. And then on the Google partnership, does that involve you making any sort of payments to Google or is this sort of a, I guess, a partnership where you're both providing services to each other and that's the compensation?

Well, let's just say that the partnership contains some very favorable financial arrangements, but I'm not at liberty to disclose those at the moment.

Okay, and then in terms of the incremental cost savings that you've -- you're generating that have -- are driving the increase in guidance, where are those cost savings coming from?

Generally from headcount reduction. We've done a little bit better than we thought. We targeted about a 15% headcount reduction and it looks like by the year end we'll be able to exceed that target, probably -- more than likely mainly from use of outsourcing.

Okay, and then just one final question. I noticed that your net revenue was down about 16.5%, your expenses were down about 9%, so I know you guys have fixed cost. Is part of the reason also for the difference in trends there, the investments that you're making on -- in your sales force and on digital side?

Yes. I mean, clearly, that does have an impact. I think, initially, we said we were looking to do 140 of gross cost reductions, reinvesting as much as 40 into digital initiatives and investing in the sales force. And so that's the difference.

Your next question does come from Chad Quinn [ph], Denet Management [ph].

In the past, it seemed that all the free cash flow was used to pay down debt, and it seems that an additional $30 million is retained as cash on the balance sheet. Is that just a timing issue of an interest contract? Or are you planning to use the cash for something else?

Yes, so we continue to expect to use all of our cash to reduce debt. We did have a little bit of a cash buildup in the quarter, and we're evaluating as we've been, we continue to evaluate opportunities to capture some of the discount in our -- the trading levels of our debt. So we're maybe building a little bit of flexibility in that regard.

Okay, and then could you just repeat what you said about the bridge from the EBITDA guidance to the free cash flow, that $50 million?

The $50 million is lower cash taxes than what we had built into our original cash flow guidance. And at our Investor Day in late February, we had identified -- I think it was $60 million for cash taxes and uses of cash and working capital. And we've -- and at that time, we indicated that, that might be conservative, and we've since gone through some tax planning, effective tax planning that reduced our expectations for cash taxes this year by about $50 million.

Okay, and I know the target is 30% digital, what's the current percentage of total revenue that's...

It's currently 14% and quarter-on-quarter growth was 9% on digital.

Next question, Jonathan Levine, Jefferies. Jonathan Levine - Jefferies & Company, Inc.: You mentioned that the trend in terms of the bookings for the second quarter are comparable kind of what you saw in the past. When we look forward to kind of 3Q and 4Q, should we also look kind of backward in terms of the trend as well? And should we be looking for that to kind of deteriorate as well in 3Q or 4Q? Or do you expect some of the digital activity to begin to kind of bring that back down?

Okay. As I said, with our new portfolio and our new initiative such as bundle and DGA, we're selling into Q4 and -- which is where we should begin to see the benefit. That said, Q3 historically has been one of our most challenging quarters. There is a very heavy weighting to the markets of Seattle and Las Vegas and each of those has its unique challenges. So I think once we get through the second quarter, we'll begin to see all these product initiatives kick in, both in terms of bookings and ad sales. Jonathan Levine - Jefferies & Company, Inc.: Okay. You also mentioned earlier that I believe it was 60% of your footprint experienced single-digit declines.

That's right. Jonathan Levine - Jefferies & Company, Inc.: Can you, I guess, update us where that was kind of like a quarter ago?

Actually, it was similar trend to a quarter ago. I wouldn't really say it was a material difference. We got our 9 major metros that account for about 40% of our business and then the Tier 2, Tier 3 in rural markets account for the balance of 60%, and there is a marked difference in performance between those 2, with major metros underperforming the average by about 5 percentage points and the Tier 2, Tier 3 and rural over performing the average by about 4 points. Jonathan Levine - Jefferies & Company, Inc.: Okay, and then just one more question, really a follow-up in regards to the cash. As you're looking at kind of opportunities, is that going to -- do you feel like you're going to wait until you kind of appoint kind of a permanent CFO before you make a move on something on that front? Or do you feel comfortable that you could do something before that?

No, I feel very, very comfortable. I think that Steve leaves a legacy of a very robust finance department with some very capable individuals. And I have absolute confidence in Sylvester to manage the function in the interim, and he enjoys the complete confidence in support of the management team and the board. So I'm quite confident that we're not going to miss a step or drop a day. Jonathan Levine - Jefferies & Company, Inc.: Okay, specifically in terms of kind of looking at ways to kind of reduce your debt?

Yes. Well, obviously we're going to continue with our discussions with our agent banks, looking at what options we might have to gain the ability to repurchase debt below par.

Our next question comes from Todd Morgan, Oppenheimer.

Yell announced significant changes to its business model recently, and I guess you compete with them in many of your markets. Can you talk about that impact, although it's probably fairly early to really tell if there's anything? And also, just the competitive landscape in general?

Okay. Well, first of all, yes, Yell is taking a very different approach. And so I can't really comment too much on them, they're in very different markets than we are. They do compete with us here through yellow book and so we see that, but we'll -- we monitor our peers overseas and we learn from their mistakes and profit from some of their successes, and we'll continue to do that. Our approach is to just really narrow the focus to produce a very tight portfolio, which does exactly what our customers want us to do. They want us deliver business to their front door. They want us to make the phone ring. They want to see their online ad -- their online sales humming, and they want foot traffic in their premises. And that's what we do, and we do it by providing digital leads, by managing their digital reputation, which in turn provides more leads and by managing their social media interactions, which again delivers more leads. It's all about delivering business. And so we keep that really tight focus, of focus on share of wallet and how do we get a bigger share of wallet. So I think that is a strategy that shares a marked differentiation from the one that was recently unveiled by Yell.

Okay. I guess, sort of looking at the same issue a little bit differently, is your bigger challenge really getting the new products to the customers and explaining this to them, or getting the customers to buy the products?

We have been undoubtedly product constrained, up to this point. I think we're rapidly moving to -- we're moving to remove that constraint and I'm very encouraged that by the rate at which we've been able to introduce digital products since I came on board. We will round it out that portfolio as we move into next year and then that removes that product constraint, then it's all a question of sales capacity.

Okay, and then just a last thing. I guess, this quarter had a modest uptick in the bad debt expense. How much of this is really just a mechanical result of the quarter end balances or the aging schedule? And how is much really a reflection of any real shifts in the collection experience?

It's really the former, Todd. It's really -- we determine our bad debt expense by making sure that our allowance is adequate based on the age buckets. And so this is really the mechanical operation of that.

Our last question comes from Shachar Minkove of JPMorgan Chase. Shachar Minkove - JP Morgan Chase & Co: Most of my questions have been answered, but just a quick follow-up on Jonathan's call -- question with regard to ad sales. Just looking at ad sales of $369 million and revenue of $377 million, suggesting kind of a book-to-bill ratio of not quite 1, 1:1, but pretty close. And I guess how do we reconcile that versus ad sale declines of 15% going forward, is part of this just being driven by digital? What’s the -- can you help us sort of combine those 2?

Well, I think you need to look at the waterfall from bookings to ad sales to revenue and the way we recognize revenue on deferred and amortized basis for the print product over the 12-month cycle of the print. I think we've produced that in the past so... Shachar Minkove - JP Morgan Chase & Co: No, no, I understand that. I'm just trying to -- can you help us connect the dots a little bit, just so we understand.

Well, so the bookings number is going to be the leading indicator of what is the reported in ad sales in subsequent quarters. And I think what Alfred was saying earlier about the product introductions, we're not seeing the benefit or the impact of that at all in Q2 or Q3 ad sales. What you're going to start to see is the impact of that in Q3 bookings, which will then -- might manifest in Q4 and Q1 ad sales. I mean, Q3 ad sales are -- I don't know what the number is now, it's 90-something percent complete. So the revenue number is really just the deferred and amortized view of the last 4 quarters.

Okay. Well, if that's the last question, I'd like to thank you for your interest and for your questions. We're a company in the midst of a large-scale transformation, redefining who we are, what we do and how we do it. In the first quarter, we launched our strategy and assembled an industry-leading management team. This quarter, we expanded our digital capabilities while reducing expenses. For the rest of the year, we will introduce more digital offerings, driving bundles and DGA. Thank you for your time today. I look forward to providing updates on our progress and achievements on our next call.

Thank you for participating in today's conference. You may disconnect your lines at this time.