Classmates.com 2008 Annual Report Download - page 32

Table of Contents
We expect competition in the floral network services market to continue to increase as well. We believe we will continue to experience
increasing competition from the other floral network services providers. In addition, we expect our customers, the retail florists, likely will
continue to lose sales to supermarkets and other nationwide floral marketers, which likely will result in a continuing decrease in their revenues
and in the number of retail florists. As the number of retail florists and their revenues decrease, competition for the remaining retail florists and
their business will intensify.
Increased competition in the consumer market or the floral network services market may result in lower revenues, reduced gross margins,
loss of market share, and increased marketing expenditures. We cannot provide assurance that we will be able to compete successfully or that
competitive pressures will not have a material adverse effect on our business, financial condition, results of operations, and cash flows.
We are dependent on third-parties who fulfill orders and deliver goods and services to our customers and their failure to provide our
customers with high quality products and customer service may harm our brand and could have a material adverse effect on our
business, financial condition, results of operations, and cash flows.
We believe that our success in promoting and enhancing our brands depends on our ability to provide our customers high quality products
and a high level of customer service. Our business depends, in part, on the ability of our network of independent florist members and third-party
suppliers who fulfill our orders to do so at high quality levels. We work with our florist members and third-party suppliers to develop best
practices for quality assurance; however, we generally do not directly control or continuously monitor any florist member or third-
party supplier.
The failure of our network of florist members or third-
party suppliers to fulfill orders to our customers' satisfaction, at an acceptable quality level
and within the required timeframe, could adversely impact our brand and cause us to lose customers, which could have a material adverse effect
on our business, financial condition, results of operations, and cash flows.
Additionally, because we depend upon third-parties for the delivery of our products to customers, strikes or other service interruptions
affecting these shippers could have an adverse effect on our ability to deliver our products on a timely basis. If any of our shippers are unable or
unwilling to deliver our products, we would have to engage alternative shippers which could increase our costs. A disruption in any of our
shippers' delivery of our products could cause us to lose customers or could increase our costs, which could have a material adverse effect on our
business, financial condition, results of operations, and cash flows.
The success of our business is dependent on our florist members and on the financial performance of the retail floral industry.
A significant portion of our profitability is dependent on our florist members. We have lost, and may continue to lose, florist members as a
result of both our members choosing not to do business with us as well as declines in the number of retail florists as a result of economic factors
and competition. If we lose a significant number of florist members, or if we are not able to maintain or increase revenues from our florist
members, our business, financial condition, results of operations, and cash flows may be materially and adversely affected.
If the supply of flowers becomes limited, the price of these products could rise or these products may become unavailable, which could
result in our not being able to meet consumer demand and could cause an adverse effect on our business, financial condition, results of
operations, and cash flows.
Many factors, such as weather conditions, agricultural limitations and restrictions relating to the management of pests and disease, affect the
supply of flowers and the price of our floral products. If the supply of flowers available for sale is limited, the wholesale prices of flowers could
rise, which
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