1367396--2/29/2008--IDEARC

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We face widespread competition from other print directory publishers and other traditional and new media. This competition may reduce our market share or materially adversely affect our financial performance. Declining use of print yellow pages directories is adversely affecting our business. Increased competition in local telephone markets could reduce the benefits of using the Verizon brand name. A prolonged economic downturn would adversely affect our business. If we fail to anticipate or respond effectively to changes in technology and consumer preferences, our competitive position could be harmed. Our reliance on small- and medium-sized businesses exposes us to increased credit risks. Our dependence on third-party providers for printing and distribution services could materially affect us. Increases in the price or decreases in the availability of paper could materially affect our costs of operations. A portion of our indebtedness bears interest at variable rates. If interest rates increase, our interest expense will also increase. Our sales of advertising to national accounts are dependent upon third parties that we do not control. We have agreements with several major Internet search engines and portals. The termination of one or more of these agreements could adversely affect our business. Increased regulation regarding information technology could lead to increased costs. A significant portion of our employees are union-represented. Our business could be adversely affected by the progress and outcome of our labor negotiations and by our ability to maintain good relations with our unionized employees. Loss of key personnel or our inability to attract and retain highly qualified individuals in the businesses in which we operate would materially adversely affect our operations. Turnover among sales representatives could materially adversely affect our business. The loss of important intellectual property rights could adversely affect our results of operations and future prospects. Our reliance on technology could have a material adverse effect on our business. Legislative initiatives directed at limiting or restricting the distribution of our print directory products or shifting the costs and responsibilities of waste management related to our print products could adversely affect our business. Legal actions could have a material adverse effect on our operating results or financial condition. Idearc Inc. is a holding company and relies on dividends and other transfers of funds from its subsidiaries to meet its debt service and other obligations. Risks Related to Our Spin-Off Our historical financial information may not be indicative of our future results. We have a limited history operating as an independent company and we may incur increased costs as a result of the spin-off that may cause our profitability to decline. Limitations on our use of the Verizon brand could adversely affect our business and profitability. We could be required to indemnify Verizon if the spin-off fails to qualify for tax-free treatment as a result of our actions after the spin-off. The terms of our tax sharing agreement with Verizon may reduce our strategic and operating flexibility. The loss of any of our key agreements with Verizon could have a material adverse effect on our business. Verizon s regulatory obligation to publish white pages directories in its incumbent markets may change over time, which may increase our future operating costs. Our inability to enforce the non-competition agreement with Verizon may impair the value of our business. Risks Related to Our Common Stock The trading price of our common stock may decline. Raising additional debt or equity capital may adversely affect holders of our common stock. Our debt agreements limit our ability to pay dividends on our common stock. There is no assurance that we will pay dividends. Anti-takeover provisions in our certificate of incorporation and bylaws, the terms of our spin-off from Verizon and certain provisions of Delaware law could delay or prevent a change of control that you may favor.

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1367396--2/29/2008--IDEARC_INC.