PURCHASE, N.Y.--Sept. 22, 2002--R.H. Donnelley, a leading marketer of yellow pages advertising, today announced that it has entered into a definitive agreement to purchase Sprint Corporation's directory publishing business for $2.23 billion in cash, creating the nation's largest public stand-alone publisher of yellow pages directories. Currently, R.H. Donnelley serves as the exclusive sales agent for 41 Sprint directories in four states. Upon completion of the transaction, R.H. Donnelley will own and publish over 260 directories where Sprint's publishing business operates. In addition, the Company will continue to be the exclusive sales agent for 129 SBC directories in Illinois and Northwest Indiana through DonTech, its perpetual partnership with SBC. As part of the transaction, the Company also announced that Goldman Sachs Capital Partners 2000, L.P. and affiliated entities, has entered into a definitive agreement to invest $200 million in R.H. Donnelley through the purchase of R.H. Donnelley convertible preferred stock. The Company has received a firm commitment from Bear Stearns, Deutsche Bank and Salomon Smith Barney to finance the transaction and refinance existing debt. The transaction, expected to close in the first quarter of 2003, is subject to customary regulatory approvals and closing conditions. "R.H. Donnelley has a strong heritage in yellow pages publishing that extends back to our publication of the first directory in 1886, " said David C. Swanson, R.H. Donnelley's President and CEO. "This acquisition enables us to continue this proud heritage by transforming our business from a sales agent and pre-press publishing vendor to a fully integrated yellow pages publishing company. This new role as owner/operator provides many benefits, not the least of which is the use of Sprint's sales infrastructure to market other products and services and move into new territories." Swanson continued, "The transaction will give R.H. Donnelley a broad portfolio distinguished by customer and market diversity. This will substantially increase the Company's scale, margin potential and growth opportunities - all of which will create the opportunity for R.H. Donnelley to deliver enhanced value to our shareholders. Lastly, as Sprint's partner in their largest markets for many years, we know this business extremely well and have long recognized Sprint as a leader in the industry. This hands-on knowledge and established working relationship with Sprint employees should help facilitate a smooth integration and enable us to better capitalize on the significant synergies associated with the acquisition." Swanson added, "We are excited to have Goldman Sachs Capital Partners as a member of the R.H. Donnelley team and a strategic partner in this transforming acquisition. We look forward to their advice and counsel and value their management expertise and extensive knowledge in this sector." Terence M. O'Toole, a Goldman Sachs Managing Director, said, "Goldman Sachs Capital Partners has a long history of investing in advertising-supported media companies. This investment is consistent with our strategy of investing in high-quality market leaders with strong management. With more than a century of experience in the yellow pages business, R.H. Donnelley is a leader and innovator in the industry. The new R.H. Donnelley will have outstanding market positions, deep operational knowledge, and a strong management team, all of which should provide excellent future prospects for growth." Peter J. McDonald, who most recently served as President of SBC Directory Operations, the nation's largest yellow pages publisher, and who also has been on the RHD Board of Directors, has joined R.H. Donnelley management as Senior Vice President of R.H. Donnelley and President of Donnelley Media, a new unit that will unite the Sprint business with CenDon, R.H. Donnelley's current partnership with Sprint. McDonald, 51, who previously served as President of Ameritech Publishing's yellow pages and as President of DonTech, will report directly to Swanson. As McDonald assumes his management responsibilities, he will step down from the Board of Directors. Swanson commented, "We are delighted that Peter has agreed to join the R.H. Donnelley management team. He's well known in the industry as an outstanding transformational leader and has significant experience integrating directory companies, having led the transition effort when Ameritech was acquired by SBC. With nearly 30 years experience in the directories publishing business, Peter is the ideal leader for Donnelley Media." Following the acquisition, R.H. Donnelley expects to have 2002 pro forma annual revenues of approximately $570 million. The Company will publish over 260 Sprint yellow pages directories in 18 states, have a total circulation of more than 18 million, and serve approximately 156,000 local and 4,700 national advertisers. The Sprint yellow pages business will continue to be operated from its existing headquarters in Overland Park, Kansas. The acquisition is expected to be accretive to R.H. Donnelley's cash earnings per share in 2003 and beyond. The purchase price represents approximately 8.6x expected 2002 EBITDA, declining to less than 8x after taking into effect expected operating efficiencies and cost savings from combining the two companies. The multiple is expected to decline further as a result of anticipated tax benefits. Steven M. Blondy, R.H. Donnelley's Chief Financial Officer, said, "With this transaction, R.H. Donnelley will have a substantially greater revenue and EBITDA base on which to build increased operating margins and improved cash flows, enabling us to quickly reduce acquisition debt levels. Consistent with R.H. Donnelley's philosophy, we will continue to maintain our commitment to financial discipline and to creating value for our shareholders." The convertible preferred stock purchased by Goldman Sachs Capital Partners is expected to have a conversion price of $24.05 and will carry a dividend of 8%, payable in cash or stock at the Company's option. Goldman Sachs Capital Partners will receive warrants to acquire 1.65 million shares of R.H. Donnelley stock with an exercise price equal to the 30-day average of the stock price at closing. On anas converted basis, the investment will give Goldman Sachs Capital Partners a beneficial ownership stake in R.H. Donnelley of approximately 23%. The Company will issue treasury stock to satisfy conversion. In addition, two Goldman Sachs Capital Partners representatives will join the Company's Board of Directors. Bear Stearns and Morgan Stanley acted as advisors to the Company.