1367396--3/8/2007--IDEARC

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Risks Related to Our Business Our substantial indebtedness could have a negative impact on our financing options and liquidity position. Changes in interest rates may affect our cash flow and results of operations. Restrictions in our financing arrangements could limit our operating and strategic flexibility. We face widespread competition from other print directory publishers that may reduce our market share or materially adversely affect our financial performance. If we fail to anticipate or respond adequately to changes in technology and user preferences, our competitive position could be materially adversely affected. Declining usage of print yellow pages directories may adversely affect our business. Our credit ratings are below investment grade, which could completely or adversely restrict our access to capital. Idearc Inc. is a holding company and relies on dividends, interest and other payments, advances and transfers of funds from its subsidiaries to meet debt service and other obligations. Our dependence on third-party providers of printing and distribution services could materially affect us. Increased competition in local telephone markets could reduce the benefits of using the Verizon brand name. Fluctuations in the price or availability of paper could materially affect our costs and, as a result, our profitability. Additional regulation regarding information technology could lead to increased costs. Our advertising sales to national accounts is dependent upon third parties that we do not control. We have agreements with several major search engines and portals, the discontinuance of which may adversely affect our business. Our reliance on small- and medium-sized businesses exposes us to increased credit risks. Loss of key personnel or our inability to attract and retain highly qualified individuals in the directories publishing business could materially adversely affect our business. Turnover among sales representatives could materially adversely affect our business. We could be affected by certain changes in labor matters. A prolonged economic downturn could adversely materially affect our business. The loss of important intellectual property rights could adversely affect our prospects and results of operations. Environmental compliance costs and liabilities could adversely affect our operating results, including our cash available for operations. Our exposure to legal proceedings could have a material adverse effect on our operating results or financial condition. Our reliance on technology could have a material adverse effect on our business. 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 may 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. Our inability to enforce the non-competition agreement with Verizon may impair the value of our business. If Verizon prematurely halts its obligations under the transition services agreement or if we are unable to replicate the transition services internally, our business would be materially adversely affected. Verizon s regulatory obligation to publish white pages directories in its incumbent markets may change over time, which may result in an increase in our future operating costs. Risks Related to Our Common Stock The trading price of our common stock may decline. Our capital raising may adversely affect holders of our common stock through the issuance of more senior securities or through dilution. Our financing arrangements contain significant limitations on our ability to pay dividends on our common stock. There is no assurance that we will declare dividends or cash available to make dividend payments. 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--3/8/2007--IDEARC_INC.