Classmates.com 2007 Annual Report Download - page 29

We may not realize the benefits associated with our assets and may be required to record a significant charge to earnings if we are
required to impair our assets.
We have capitalized goodwill and other intangible assets in connection with our acquisitions. We evaluate the recoverability of our
identifiable intangible assets and other long-lived assets for impairment when events occur or circumstances change that would indicate that the
carrying amount of an asset may not be recoverable. In addition, we perform an impairment test of our goodwill annually during the fourth
quarter of our fiscal year or when events occur or circumstances change that would more likely than not indicate that goodwill might be
permanently impaired. If our acquisitions are not commercially successful, we would likely be required to record impairment charges which
would negatively impact our financial condition and results of operations. For example, in the fourth quarter of 2006, we impaired certain long-
lived assets associated with our VoIP services and certain goodwill and intangible assets associated with the acquisition of our photo sharing
services. We have experienced impairment charges in the past, and we cannot assure you that we will not experience such charges in the future.
In addition, from time to time, we record assets on our balance sheet that, due to changes in value or in our strategy, may have to be expensed in
future periods. Write-downs or impairments of assets, whether tangible or intangible, could adversely and materially impact our financial
condition and results of operations.
Our ability to operate our business could be seriously harmed if we lose members of our senior management team or other key
employees.
Our business is largely dependent on the efforts and abilities of our senior management, particularly Mark R. Goldston, our chairman,
president and chief executive officer, and other key personnel. Any of our officers or employees can terminate his or her employment
relationship at any time. The loss of any of these key employees or our inability to attract or retain other qualified employees could seriously
harm our business and prospects. We do not carry key-person life insurance on any of our employees.
Changes in laws and regulation changes and new laws and regulations may adversely affect our results of operations.
We are subject to a variety of international, federal, state, and local laws and regulations, including those relating to issues such as user
privacy and data protection, defamation, pricing, advertising, taxation, sweepstakes, promotions, billing, content regulation, bulk email or
"spam," anti-spyware initiatives, security breaches, and consumer protection. Compliance with the various laws and regulations, which in many
instances are unclear or unsettled, is complex. Any changes in such laws and regulations, the enactment of any additional laws or regulations, or
increased enforcement activity of such laws and regulations, could significantly impact our costs or the manner in which we conduct business, all
of which could adversely impact our results of operations and cause our business to suffer.
The FTC and certain state agencies have investigated Internet companies, including us, in connection with consumer protection and privacy
matters. The federal government has also enacted consumer protection laws, including laws protecting the privacy of consumers' nonpublic
personal information. Our failure to comply with existing laws, including those of foreign countries in which we operate, the adoption of new
laws or regulations or changes in enforcement policies and procedures regarding the use of personal information or an investigation of our
privacy practices could increase the costs of operating our business. To the extent that our services and business practices change as a result of
changes in regulations or claims or actions by governmental agencies, such as the FTC, or claims or actions by private parties, our business,
financial position, results of operations and cash flows could be materially adversely affected.
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