Classmates.com 2008 Annual Report Download - page 37

Table of Contents
Our Internet access business is dependent on the availability of telecommunications services.
Our Internet access business substantially depends on the availability, capacity, affordability, reliability, and security of our
telecommunications networks. Only a limited number of telecommunications providers offer the network and data services we currently require,
and we purchase most of our telecommunications services from a few providers. Some of our telecommunications services are provided pursuant
to short-term agreements that the providers can terminate or elect not to renew. In addition, some telecommunications providers may cease to
offer network services for certain less populated areas, which would reduce the number of providers from which we may purchase services and
may entirely eliminate our ability to purchase services for certain areas. If we are unable to maintain, renew or obtain new agreements with
telecommunications providers, our business, financial position, results of operations, and cash flows could be materially and adversely affected.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our corporate headquarters is located in Woodland Hills, California and consists of leased space of approximately 0.1 million square feet.
We also lease office space in New York, New York; Fort Lee, New Jersey; and Hyderabad, India, which is generally used by our
Communications segment. Additionally, we lease office space in Seattle, Washington; San Francisco, California; Schaumburg, Illinois;
Erlangen, Germany; and Berlin, Germany, which is generally used by our Classmates Media segment. Our FTD segment also occupies leased
office space in Vaudreuil, Quebec and call center facilities in Centerbrook, Connecticut; Medford, Oregon; Sherwood, Arkansas; and
Nottingham, England. We also lease warehouse space in a distribution center in Aurora, Illinois, which is used by our FTD segment.
We own office space in Downers Grove, Illinois and Sleaford, England which is occupied by our FTD and Interflora operations,
respectively. We entered into a credit agreement in conjunction with the acquisition of FTD, which includes a security interest in substantially all
of its assets, including a mortgage on the owned real property at the Downers Grove, Illinois location.
We believe that our existing facilities are adequate to meet our current requirements and that suitable additional or substitute space will be
available as needed to accommodate any physical expansion of our corporate and operations facilities, customer support and technology centers
or for any additional sales offices. For additional information regarding our obligations under leases, see Note 16—"Commitments and
Contingencies" to our Consolidated Financial Statements included in this Annual Report on Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
In April 2001 and in May 2001, lawsuits were filed in the United States District Court for the Southern District of New York against
NetZero, Inc. ("NetZero"), certain officers and directors of NetZero and the underwriters of NetZero's initial public offering, Goldman Sachs
Group, Inc., BancBoston Robertson Stephens, Inc. and Salomon Smith Barney, Inc. A consolidated amended complaint was filed in April 2002.
The complaint alleges that the prospectus through which NetZero conducted its initial public offering in September 1999 was materially false
and misleading because it failed to disclose, among other things, that (i) the underwriters had solicited and received excessive and undisclosed
commissions from certain investors in exchange for which the underwriters allocated to those investors material portions of the restricted number
of NetZero shares issued in connection with the offering; and (ii) the underwriters had entered into agreements with customers whereby the
underwriters agreed to allocate NetZero shares to those customers in the offering in exchange for
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