1367396--3/12/2009--IDEARC

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Risks Related to Our Business and our Financial Condition We may not be able to repay our indebtedness and we may need to restructure all or a portion of our indebtedness. The recent downgrades in Idearc's credit ratings may increase our borrowing costs. Our restructuring efforts to strengthen our balance sheet and reduce our debt may adversely affect holders of our common stock through dilution or complete loss in value. The liquidity of any trading market that currently exists for the Senior Notes may be adversely affected by our plan to restructure our balance sheet and debt service obligations. Holders of the Senior Notes may find it more difficult to sell their Senior Notes when they want to, and if they do, they may not be able to receive the price they want. Our revenue has declined and may continue to decline. 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. Our business and financial condition would be adversely affected by a prolonged economic downturn and other external events. 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 adversely affect our costs of operations. A portion of our existing 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 could materially adversely affect our business 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. Risks Related to Our Spin-Off 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. Regulatory obligations requiring incumbent local exchange carriers 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 and Senior Notes Our common stock was delisted from the New York Stock Exchange ("NYSE") and currently is quoted over-the-counter, which may impair the market price and liquidity of our common stock and result in adverse business consequences. The trading price of our common stock may further decline. There is no assurance that we will pay dividends again in the future. 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.

Full 10-K form ▸

1367396--3/12/2009--IDEARC_INC.