Fellow Investors:
The words on the front cover of this report clearly describe an extraordinary company.
Idearc was created through a spin-off from Verizon in November 2006, and we knew then that the key to success was straightforward: "Do what you say you are going to do."
We committed to providing solid total return to our shareholders and to our advertisers. We've done just that. We are pleased to share 2006 financial highlights for the company we launched just four months ago:
- Strong cash flow resulted in our first dividend to shareholders;
- Financial guidance was in line with what we laid out to investors;
- The spin-off from Verizon was efficient and successful;
- Fourth-quarter and year-end results reflect improving trends in published revenue performance.
We delivered on our objectives because we executed well and advanced our competitive advantages: a solid, value-generating portfolio; a resilient multi-platform business model; and a national base of diverse markets and customers.
We saw an improving trend in fourth-quarter published revenue results, as the key investments we made in the company began to pay off. First, we distributed more directories to homes across the country, allowing our advertisers' content to get through to more consumers who are ready to buy. Second, we hired and trained more sales representatives, bringing our total sales force to more than 3,000 professionals who can sell multi-media products. And, third, we brought search engine marketing technology in-house through the acquisition of Inceptor, enabling us to more efficiently manage industry-leading Internet advertising programs.
Idearc is in excellent financial position because our recurring revenue streams and strong cash flow give us the opportunity to continue growing the business and paying a dividend.
We also have the flexibility to make prudent investments when they make sense for our future.
I encourage you to become more familiar with Idearc through this annual report. You will recognize a resourceful company with deep industry expertise.
We have more than a century of yellow pages experience, and have been at the forefront of Internet yellow pages and local search since its inception.
We are confident in our strategy and prospects for the future. Thank you for investing with us.
Katherine J. Harless
President and Chief Executive Officer
