UNAUDITED FINANCIAL INFORMATION

EX-99.2 3 dex992.htm UNAUDITED FINANCIAL INFORMATION UNAUDITED FINANCIAL INFORMATION

Exhibit 99.2

IDEARC INC.

Mutli-Product Advertising Sales

(dollars in millions)


Unaudited	3 Mos. Ended 3/31/06			3 Mos. Ended 6/30/06			3 Mos. Ended 9/30/06			3 Mos. Ended 12/31/06			12 Mos. Ended 12/31/06
Net Print Products Revenue⁽¹⁾	$	701		$	770		$	577		$	860		$	2,908
% Change year-over-year		(5.1	%)		(2.5	%)		(3.4	%)		(1.0	%)		(2.9	%)
Net Internet Revenue⁽²⁾		52			55			60			63			230
% Change year-over-year		6.1	%		12.2	%		22.4	%		26.0	%		16.8	%

Net Multi-Product Advertising Sales⁽³⁾	$	753		$	825		$	637		$	923		$	3,138
% Change year-over-year		(4.4	%)		(1.7	%)		(1.4	%)		0.5	%		(1.7	%)


Unaudited	3 Mos. Ended 3/31/05			3 Mos. Ended 6/30/05			3 Mos. Ended 9/30/05			3 Mos. Ended 12/31/05			12 Mos. Ended 12/31/05
Net Print Products Revenue⁽¹⁾	$	739		$	790		$	597		$	868		$	2,994
% Change year-over-year		(5.0	%)		(4.9	%)		(5.2	%)		(6.8	%)		(5.6	%)
Net Internet Revenue⁽²⁾		49			49			49			50			197
% Change year-over-year		25.6	%		28.9	%		14.0	%		11.1	%		19.4	%

Net Multi-Product Advertising Sales⁽³⁾	$	788		$	839		$	646		$	918		$	3,191
% Change year-over-year		(3.5	%)		(3.5	%)		(4.0	%)		(6.0	%)		(4.3	%)


Unaudited	3 Mos. Ended 3/31/04			3 Mos. Ended 6/30/04			3 Mos. Ended 9/30/04			3 Mos. Ended 12/31/04			12 Mos. Ended 12/31/04
Net Print Products Revenue⁽¹⁾	$	778		$	831		$	630		$	932		$	3,171
Net Internet Revenue⁽²⁾		39			38			43			45			165

Net Multi-Product Advertising Sales⁽³⁾	$	817		$	869		$	673		$	977		$	3,336

Notes:

⁽¹⁾

Net print products revenue represents the total revenue value (less a provision for sales allowances) of directories published that will be amortized over the life of the directories, which is typically 12 months. Directories from preceding periods have been aligned to match the publication schedule of 2006 publications, allowing for a meaningful comparison of current publications to previous publications.

⁽²⁾

Net Internet revenue represents total revenue for our fixed-fee and performance-based advertising products less a provision for sales allowances. Fixed-fee advertising includes advertisement placement on our Superpages.com website, and website development and hosting for our advertisers. Revenue from fixed-fee advertisers is recognized monthly over the life of the advertising service. Performance-based advertising revenue is earned when consumers connect with our Superpages.com advertisers by a “click” on their Internet advertising or a phone call to their business. Revenue from performance-based advertising is recognized when there is evidence that qualifying transactions have occurred.

⁽³⁾	Net multi-product advertising sales is a statistical measure. It is important to distinguish net mult-product advertising sales from total operating revenue, which on our financial statements is recognized under the deferral and amortization method.

IDEARC INC.

Consolidated Statements of Income

Reconciliation from Reported (GAAP) to Adjusted Pro Forma (Non-GAAP)

Twelve Months Ended December 31, 2005

(dollars in millions, except per share amounts)


				Pro Forma Items
Unaudited	12 Mos. Ended 12/31/05 Reported (GAAP)			Pension OPEB Reduction⁽³⁾			Printing Contract⁽⁴⁾			Hawaii Operations ⁽⁵⁾			Debt ⁽⁶⁾			12 Mos. Ended 12/31/05 Adjusted Pro Forma (Non-GAAP)
Operating Revenue
Print products	$	3,147		$	—		$	—		$	(22	)	$	—		$	3,125
Internet		197			—			—			—			—			197
Other		30			—			(24	)		—			—			6

Total Operating Revenue		3,374			—			(24	)		(22	)		—			3,328

Operating Expense
Selling		650			(25	)		—			(2	)		—			623
Cost of sales (exclusive of depreciation and amortization)		622			(9	)		(43	)		(2	)		—			568
General and administrative		374			(6	)		—			(2	)		—			366
Depreciation and amortization		91			—			—			—			—			91

Total Operating Expense		1,737			(40	)		(43	)		(6	)		—			1,648

Operating Income		1,637			40			19			(16	)		—			1,680
Interest expense (income), net		(16	)		—			—			—			718			702

Income Before Provision for Income Taxes		1,653			40			19			(16	)		(718	)		978
Provision for income taxes		630			16			7			(6	)		(280	)		367

Net Income	$	1,023		$	24		$	12		$	(10	)	$	(438	)	$	611

Basic and Diluted Earnings per Share ⁽¹⁾	$	7.01		$	.16		$	.08		$	(.07	)	$	(3.00	)	$	4.19
Operating Income	$	1,637		$	40		$	19		$	(16	)	$	—		$	1,680
Depreciation and Amortization		91			—			—			—			—			91

OIBITDA (non-GAAP) ⁽²⁾	$	1,728		$	40		$	19		$	(16	)	$	—		$	1,771

OIBITDA (non-GAAP) margin ⁽²⁾		51.2	%														53.2	%

Notes:

⁽¹⁾	The number of shares issued in the spin-off of Idearc on November 17, 2006 was approximately 146 million. For basic and diluted earnings per share calculations it was assumed that approximately 146 million shares were outstanding for the entire period.

⁽²⁾	OIBITDA is a non-GAAP measure that represents Operating Income Before Interest, Taxes, Depreciation, and Amortization. OIBITDA margin is calculated by dividing OIBITDA by total operating revenue.

⁽³⁾

On-going net pension and OPEB expenses are expected to be reduced, primarily as a result of the 414(l) pension asset transfer from the Verizon pension plan as the result of the Idearc spin-off from Verizon. This pro forma adjustment is to reflect the expected on-going pension and OPEB cost levels during this historical period.

⁽⁴⁾

In 2006, Idearc exited the commercial printing business and entered into a printing contract with a third party. This pro forma adjustment is to reflect the impact of exiting the commercial print business ($24 million in revenue and $22 million in costs) and a reduction in printing cost rates during this historical period.

⁽⁵⁾	Reflects the elimination of Hawaii operations, which were sold in May 2005.

⁽⁶⁾	As a result of the spin on November 17, 2006, Idearc now has $9.1 billion of debt and will incur interest expense that it did not incur in the past. This pro forma adjustment is to reflect the ongoing interest expense levels during this historical period.

IDEARC INC.

Consolidated Statements of Income

Reported (GAAP)

Twelve Months Ended December 31, 2006

(dollars in millions, except per share amounts)


Unaudited	3 Mos. Ended 3/31/06			3 Mos. Ended 6/30/06			3 Mos. Ended 9/30/06			3 Mos. Ended 12/31/06		12 Mos. Ended 12/31/06
Operating Revenue
Print products	$	752		$	746		$	743		$	737	$	2,978
Internet		52			55			60			63		230
Other		9			1			2			1		13

Total Operating Revenue		813			802			805			801		3,221

Operating Expense
Selling		168			182			172			186		708
Cost of sales (exclusive of depreciation and amortization)		162			163			149			155		629
General and administrative		99			99			88			162		448
Depreciation and amortization		23			21			23			22		89

Total Operating Expense		452			465			432			525		1,874
Operating Income		361			337			373			276		1,347
Interest expense (income), net		(6	)		(7	)		(8	)		81		60

Income Before Provision for Income Taxes		367			344			381			195		1,287
Provision for income taxes		142			134			136			88		500

Net Income	$	225		$	210		$	245		$	107	$	787

Basic and Diluted Earnings per Share ⁽¹⁾	$	1.54		$	1.44		$	1.68		$	.73	$	5.40
Weighted average number of common shares (in millions)		146			146			146			146		146

Notes:

⁽¹⁾

The number of shares issued in the spin-off of Idearc on November 17, 2006 was approximately 146 million. For basic and diluted earnings per share calculations it was assumed that approximately 146 million shares were outstanding for the entire period. No additional shares were issued through December 31, 2006.

IDEARC INC.

Consolidated Statements of Income

Adjusted Pro Forma (Non-GAAP)⁽¹⁾

Twelve Months Ended December 31, 2006

(dollars in millions, except per share amounts)


Unaudited	3 Mos. Ended 3/31/06		3 Mos. Ended 6/30/06		3 Mos. Ended 9/30/06		3 Mos. Ended 12/31/06		12 Mos. Ended 12/31/06
Operating Revenue
Print products	$	752	$	746	$	743	$	737	$	2,978
Internet		52		55		60		63		230
Other		2		1		2		1		6

Total Operating Revenue		806		802		805		801		3,214

Operating Expense
Selling		160		174		167		181		682
Cost of sales (exclusive of depreciation and amortization)		147		153		142		151		593
General and administrative		97		97		91		93		378
Depreciation and amortization		23		21		23		22		89

Total Operating Expense		427		445		423		447		1,742
Operating Income		379		357		382		354		1,472
Interest expense (income), net		175		176		175		176		702

Income Before Provision for Income Taxes		204		181		207		178		770
Provision for income taxes		79		71		67		73		290

Net Income	$	125	$	110	$	140	$	105	$	480

Basic and Diluted Earnings per Share ⁽²⁾	$	.86	$	.75	$	.96	$	.72	$	3.29
Weighted average number of common shares (in millions)		146		146		146		146		146

Notes:

⁽¹⁾	In the following schedules, you will find reconciliations from reported (GAAP) results to adjusted pro forma (non-GAAP) results for each of the periods presented above.

⁽²⁾

The number of shares issued for the spin-off of Idearc on November 17, 2006 was approximately 146 million. For basic and diluted earnings per share calculations it was assumed that approximately 146 million shares were outstanding for the entire period. No additional shares were issued through December 31, 2006.

IDEARC INC.

Consolidated Statements of Income

Reconciliation from Reported (GAAP) to Adjusted Pro Forma (Non-GAAP)

Twelve Months Ended December 31, 2006

(dollars in millions, except per share amounts)


				Non-Recurring Items									Pro Forma Items
Unaudited	12 Mos. Ended 12/31/06 Reported (GAAP)			Stock Based Compensation Charge ⁽³⁾			Separation Costs ⁽⁴⁾			12 Mos. Ended 12/31/06 Adjusted (Non-GAAP)			Pension OPEB Reduction⁽⁵⁾			Printing Contract⁽⁶⁾			Debt ⁽⁷⁾			12 Mos. Ended 12/31/06 Adjusted Pro Forma (Non-GAAP)
Operating Revenue
Print products	$	2,978		$	—		$	—		$	2,978		$	—		$	—		$	—		$	2,978
Internet		230			—			—			230			—			—			—			230
Other		13			—			—			13			—			(7	)		—			6

Total Operating Revenue		3,221			—			—			3,221			—			(7	)		—			3,214

Operating Expense
Selling		708			—			—			708			(26	)		—			—			682
Cost of sales (exclusive of depreciation and amortization)		629			—			—			629			(8	)		(28	)		—			593
General and administrative		448			(39	)		(30	)		379			(1	)		—			—			378
Depreciation and amortization		89			—			—			89			—			—			—			89

Total Operating Expense		1,874			(39	)		(30	)		1,805			(35	)		(28	)		—			1,742

Operating Income		1,347			39			30			1,416			35			21			—			1,472
Interest expense (income), net		60			—			—			60			—			—			642			702

Income Before Provision for Income Taxes		1,287			39			30			1,356			35			21			(642	)		770
Provision for income taxes		500			15			4			519			13			8			(250	)		290

Net Income	$	787		$	24		$	26		$	837		$	22		$	13		$	(392	)	$	480

Basic and Diluted Earnings per Share ⁽¹⁾	$	5.40		$	.17		$	.18		$	5.74		$	.15		$	.09		$	(2.69	)	$	3.29
Operating Income	$	1,347		$	39		$	30		$	1,416		$	35		$	21		$	—		$	1,472
Depreciation and Amortization		89			—			—			89			—			—			—			89

OIBITDA (non-GAAP) ⁽²⁾	$	1,436		$	39		$	30		$	1,505		$	35		$	21		$	—		$	1,561

OIBITDA (non-GAAP) margin ⁽²⁾		44.6	%								46.7	%											48.6	%

Notes:

⁽¹⁾

⁽²⁾	OIBITDA is a non-GAAP measure that represents Operating Income Before Interest, Taxes, Depreciation, and Amortization. OIBITDA margin is calculated by dividing OIBITDA by total operating revenue.

⁽³⁾	The stock-based compensation charge reflects a one-time adjustment to record stock compensation expense of $39 million associated with Verizon stock-based compensation and other stock-based awards that vested at the time of spin.

⁽⁴⁾	Separation costs are non-recurring costs associated with becoming a stand-alone entity as a result of the spin-off from Verizon.

⁽⁵⁾

⁽⁶⁾	Reflects the impact of entering into a new printing contract which resulted in exiting the commercial printing business ($7 million in revenue and $4 million in costs) and a reduction in printing cost rates.

⁽⁷⁾	As a result of the spin on November 17, 2006, Idearc now has $9.1 billion of debt and will incur interest expense that it did not incur in the past. This pro forma adjustment is to reflect the ongoing interest expense levels during this historical period.

IDEARC INC.

Consolidated Statements of Income

Reconciliation from Reported (GAAP) to Adjusted Pro Forma (Non-GAAP)

Three Months Ended March 31, 2006

(dollars in millions, except per share amounts)


				Non-Recurring Items							Pro Forma Items
Unaudited	3 Mos. Ended 3/31/06 Reported (GAAP)			Stock Based Compensation Charge ⁽³⁾		Separation Costs ⁽⁴⁾		3 Mos. Ended 3/31/06 Adjusted (Non-GAAP)			Pension OPEB Reduction⁽⁵⁾			Printing Contract⁽⁶⁾			Debt ⁽⁷⁾			3 Mos. Ended 3/31/06 Adjusted Pro Forma (Non-GAAP)
Operating Revenue
Print products	$	752		$	—	$	—	$	752		$	—		$	—		$	—		$	752
Internet		52			—		—		52			—			—			—			52
Other		9			—		—		9			—			(7	)		—			2

Total Operating Revenue		813			—		—		813			—			(7	)		—			806

Operating Expense
Selling		168			—		—		168			(8	)		—			—			160
Cost of sales (exclusive of depreciation and amortization)		162			—		—		162			(2	)		(13	)		—			147
General and administrative		99			—		—		99			(2	)		—			—			97
Depreciation and amortization		23			—		—		23			—			—			—			23

Total Operating Expense		452			—		—		452			(12	)		(13	)		—			427

Operating Income		361			—		—		361			12			6			—			379
Interest expense (income), net		(6	)		—		—		(6	)		—			—			181			175

Income Before Provision for Income Taxes		367			—		—		367			12			6			(181	)		204
Provision for income taxes		142			—		—		142			4			3			(70	)		79

Net Income	$	225		$	—	$	—	$	225		$	8		$	3		$	(111	)	$	125

Basic and Diluted Earnings per Share ⁽¹⁾	$	1.54		$	—	$	—	$	1.54		$	.05		$	.02		$	(.76	)	$	.86
Operating Income	$	361		$	—	$	—	$	361		$	12		$	6		$	—		$	379
Depreciation and Amortization		23			—		—		23			—			—			—			23

OIBITDA (non-GAAP) ⁽²⁾	$	384		$	—	$	—	$	384		$	12		$	6		$	—		$	402

OIBITDA (non-GAAP) margin ⁽²⁾		47.2	%						47.2	%											49.9	%

Notes:

⁽¹⁾

⁽²⁾	OIBITDA is a non-GAAP measure that represents Operating Income Before Interest, Taxes, Depreciation, and Amortization. OIBITDA margin is calculated by dividing OIBITDA by total operating revenue.

⁽³⁾	The stock-based compensation charge reflects a one-time adjustment to record stock compensation expense associated with Verizon stock-based compensation and other stock-based awards that vested at the time of spin.

⁽⁴⁾	Separation costs are non-recurring costs associated with becoming a stand-alone entity as a result of the spin-off from Verizon.

⁽⁵⁾

⁽⁶⁾	Reflects the impact of entering into a new printing contract which resulted in exiting the commercial printing business ($7 million in revenue and $4 million in costs) and a reduction in printing cost rates.

⁽⁷⁾	As a result of the spin on November 17, 2006, Idearc now has $9.1 billion of debt and will incur interest expense that it did not incur in the past. This pro forma adjustment is to reflect the ongoing interest expense levels during this historical period.

IDEARC INC.

Consolidated Statements of Income

Reconciliation from Reported (GAAP) to Adjusted Pro Forma (Non-GAAP)

Three Months Ended June 30, 2006

(dollars in millions, except per share amounts)


				Non-Recurring Items							Pro Forma Items
Unaudited	3 Mos. Ended 6/30/06 Reported (GAAP)			Stock Based Compensation Charge ⁽³⁾		Separation Costs ⁽⁴⁾		3 Mos. Ended 6/30/06 Adjusted (Non-GAAP)			Pension OPEB Reduction⁽⁵⁾			Printing Contract⁽⁶⁾			Debt ⁽⁷⁾			3 Mos. Ended 6/30/06 Adjusted Pro Forma (Non-GAAP)
Operating Revenue
Print products	$	746		$	—	$	—	$	746		$	—		$	—		$	—		$	746
Internet		55			—		—		55			—			—			—			55
Other		1			—		—		1			—			—			—			1

Total Operating Revenue		802			—		—		802			—			—			—			802

Operating Expense
Selling		182			—		—		182			(8	)		—			—			174
Cost of sales (exclusive of depreciation and amortization)		163			—		—		163			(2	)		(8	)		—			153
General and administrative		99			—		—		99			(2	)		—			—			97
Depreciation and amortization		21			—		—		21			—			—			—			21

Total Operating Expense		465			—		—		465			(12	)		(8	)		—			445

Operating Income		337			—		—		337			12			8			—			357
Interest expense (income), net		(7	)		—		—		(7	)		—			—			183			176

Income Before Provision for Income Taxes		344			—		—		344			12			8			(183	)		181
Provision for income taxes		134			—		—		134			5			3			(71	)		71

Net Income	$	210		$	—	$	—	$	210		$	7		$	5		$	(112	)	$	110

Basic and Diluted Earnings per Share ⁽¹⁾	$	1.44		$	—	$	—	$	1.44		$	.05		$	.04		$	(.77	)	$	.75
Operating Income	$	337		$	—	$	—	$	337		$	12		$	8		$	—		$	357
Depreciation and Amortization		21			—		—		21			—			—			—			21

OIBITDA (non-GAAP) ⁽²⁾	$	358		$	—	$	—	$	358		$	12		$	8		$	—		$	378

OIBITDA (non-GAAP) margin ⁽²⁾		44.6	%						44.6	%											47.1	%

Notes:

⁽¹⁾

⁽²⁾	OIBITDA is a non-GAAP measure that represents Operating Income Before Interest, Taxes, Depreciation, and Amortization. OIBITDA margin is calculated by dividing OIBITDA by total operating revenue.

⁽³⁾	The stock-based compensation charge reflects a one-time adjustment to record stock compensation expense associated with Verizon stock-based compensation and other stock-based awards that vested at the time of spin.

⁽⁴⁾	Separation costs are non-recurring costs associated with becoming a stand-alone entity as a result of the spin-off from Verizon.

⁽⁵⁾

⁽⁶⁾	Reflects the impact of entering into a new printing contract which resulted in a reduction in printing cost rates.

⁽⁷⁾	As a result of the spin on November 17, 2006, Idearc now has $9.1 billion of debt and will incur interest expense that it did not incur in the past. This pro forma adjustment is to reflect the ongoing interest expense levels during this historical period.

IDEARC INC.

Consolidated Statements of Income

Reconciliation from Reported (GAAP) to Adjusted Pro Forma (Non-GAAP)

Three Months Ended September 30, 2006

(dollars in millions, except per share amounts)


				Non-Recurring Items								Pro Forma Items
Unaudited	3 Mos. Ended 9/30/06 Reported (GAAP)			Stock Based Compensation Charge ⁽³⁾		Separation Costs ⁽⁴⁾			3 Mos. Ended 9/30/06 Adjusted (Non-GAAP)			Pension OPEB Reduction⁽⁵⁾			Printing Contract⁽⁶⁾			Debt ⁽⁷⁾			3 Mos. Ended 9/30/06 Adjusted Pro Forma (Non-GAAP)
Operating Revenue
Print products	$	743		$	—	$	—		$	743		$	—		$	—		$	—		$	743
Internet		60			—		—			60			—			—			—			60
Other		2			—		—			2			—			—			—			2

Total Operating Revenue		805			—		—			805			—			—			—			805

Operating Expense
Selling		172			—		—			172			(5	)		—			—			167
Cost of sales (exclusive of depreciation and amortization)		149			—		—			149			(3	)		(4	)		—			142
General and administrative		88			—		(2	)		86			5			—			—			91
Depreciation and amortization		23			—		—			23			—			—			—			23

Total Operating Expense		432			—		(2	)		430			(3	)		(4	)		—			423

Operating Income		373			—		2			375			3			4			—			382
Interest expense (income), net		(8	)		—		—			(8	)		—			—			183			175

Income Before Provision for Income Taxes		381			—		2			383			3			4			(183	)		207
Provision for income taxes		136			—		1			137			1			1			(72	)		67

Net Income	$	245		$	—	$	1		$	246		$	2		$	3		$	(111	)	$	140

Basic and Diluted Earnings per Share ⁽¹⁾	$	1.68		$	—	$	.01		$	1.69		$	.01		$	.02		$	(.76	)	$	.96
Operating Income	$	373		$	—	$	2		$	375		$	3		$	4		$	—		$	382
Depreciation and Amortization		23			—		—			23			—			—			—			23

OIBITDA (non-GAAP) ⁽²⁾	$	396		$	—	$	2		$	398		$	3		$	4		$	—		$	405

OIBITDA (non-GAAP) margin ⁽²⁾		49.2	%							49.4	%											50.3	%

Notes:

⁽¹⁾

⁽²⁾	OIBITDA is a non-GAAP measure that represents Operating Income Before Interest, Taxes, Depreciation, and Amortization. OIBITDA margin is calculated by dividing OIBITDA by total operating revenue.

⁽³⁾	The stock-based compensation charge reflects a one-time adjustment to record stock compensation expense associated with Verizon stock-based compensation and other stock-based awards that vested at the time of spin.

⁽⁴⁾	Separation costs are non-recurring costs associated with becoming a stand-alone entity as a result of the spin-off from Verizon.

⁽⁵⁾

⁽⁶⁾	Reflects the impact of entering into a new printing contract which resulted in a reduction in printing cost rates.

⁽⁷⁾	As a result of the spin on November 17, 2006, Idearc now has $9.1 billion of debt and will incur interest expense that it did not incur in the past. This pro forma adjustment is to reflect the ongoing interest expense levels during this historical period.

IDEARC INC.

Consolidated Statements of Income

Reconciliation from Reported (GAAP) to Adjusted Pro Forma (Non-GAAP)

Three Months Ended December 31, 2006

(dollars in millions, except per share amounts)


				Non-Recurring Items									Pro Forma Items
Unaudited	3 Mos. Ended 12/31/06 Reported (GAAP)			Stock Based Compensation Charge ⁽³⁾			Separation Costs ⁽⁴⁾			3 Mos. Ended 12/31/06 Adjusted (Non-GAAP)			Pension OPEB Reduction⁽⁵⁾			Printing Contract⁽⁶⁾			Debt ⁽⁷⁾			3 Mos. Ended 12/31/06 Adjusted Pro Forma (Non-GAAP)
Operating Revenue
Print products	$	737		$	—		$	—		$	737		$	—		$	—		$	—		$	737
Internet		63			—			—			63			—			—			—			63
Other		1			—			—			1			—			—			—			1

Total Operating Revenue		801			—			—			801			—			—			—			801

Operating Expense
Selling		186			—			—			186			(5	)		—			—			181
Cost of sales (exclusive of depreciation and amortization)		155			—			—			155			(1	)		(3	)		—			151
General and administrative		162			(39	)		(28	)		95			(2	)		—			—			93
Depreciation and amortization		22			—			—			22			—			—			—			22

Total Operating Expense		525			(39	)		(28	)		458			(8	)		(3	)		—			447

Operating Income		276			39			28			343			8			3			—			354
Interest expense (income), net		81			—			—			81			—			—			95			176

Income Before Provision for Income Taxes		195			39			28			262			8			3			(95	)		178
Provision for income taxes		88			15			3			106			3			1			(37	)		73

Net Income	$	107		$	24		$	25		$	156		$	5		$	2		$	(58	)	$	105

Basic and Diluted Earnings per Share ⁽¹⁾	$	.73		$	.17		$	.17		$	1.07		$	.03		$	.01		$	(.40	)	$	.72
Operating Income	$	276		$	39		$	28		$	343		$	8		$	3		$	—		$	354
Depreciation and Amortization		22			—			—			22			—			—			—			22

OIBITDA (non-GAAP) ⁽²⁾	$	298		$	39		$	28		$	365		$	8		$	3		$	—		$	376

OIBITDA (non-GAAP) margin ⁽²⁾		37.2	%								45.6	%											46.9	%

Notes:

⁽¹⁾

⁽²⁾	OIBITDA is a non-GAAP measure that represents Operating Income Before Interest, Taxes, Depreciation, and Amortization. OIBITDA margin is calculated by dividing OIBITDA by total operating revenue.

⁽³⁾	The stock-based compensation charge reflects a one-time adjustment to record stock compensation expense of $39 million associated with Verizon stock-based compensation and other stock-based awards that vested at the time of spin.

⁽⁴⁾	Separation costs are non-recurring costs associated with becoming a stand-alone entity as a result of the spin-off from Verizon.

⁽⁵⁾

⁽⁶⁾	Reflects the impact of entering into a new printing contract which resulted in a reduction in printing cost rates.

⁽⁷⁾	As a result of the spin on November 17, 2006, Idearc now has $9.1 billion of debt and will incur interest expense that it did not incur in the past. This pro forma adjustment is to reflect the ongoing interest expense levels during this historical period.