Classmates.com 2009 Annual Report Download - page 24

Table of Contents
comparisons of our revenues and operating income against prior periods. We cannot accurately predict the impact of future foreign currency
exchange rate fluctuations on our operating results, and such fluctuations could negatively impact the comparisons of such results against prior
periods.
Our marketing efforts may not be successful, which could increase our costs and adversely impact our key metrics and financial results.
We spend significant resources marketing our brands, products and services. We rely on relationships with a wide variety of third parties,
including Internet search providers, Internet advertising networks, co-
registration partners, retailers, distributers and direct marketers, to promote
or distribute our products and services. In addition, one of our strategies is to cross market our various products and services to our existing
customer base. If our marketing, including cross marketing, activities are inefficient or unsuccessful, or if important third-party relationships
become more expensive or unavailable, our key metrics and financial results could be materially and adversely impacted.
Significant problems with our key systems or those of our third-party vendors could have a material adverse effect on our business,
financial condition, results of operations, and cash flows.
The systems underlying the operations of each of our business segments are complex and diverse, and must efficiently integrate with third-
party systems, such as credit card processors. Key systems include, without limitation, billing; Web site and database management; order
transmission, fulfillment and processing including the system for transmitting orders through the floral network; customer support;
telecommunications network management; advertisement serving and management systems; and internal financial systems. Some of these
systems, such as customer support, are outsourced to third parties, and other systems, such as FTD's order transmission and fulfillment system
and the platform for our international social networking Web sites, are not redundant. We have experienced systems problems in the past, and we
or these third parties may experience problems in the future. In addition, if these third parties face financial or other difficulties, our business
could be adversely impacted. Any significant errors, failures, interruptions, delays, or other problems with our systems or our third-
party vendors
or their systems could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
In addition, our Classmates Media and Communications businesses outsource a majority of their live technical and billing support
functions. These businesses rely on one customer support vendor, and we maintain only a small number of internal customer support personnel
for these businesses. Our internal customer support personnel are not equipped to provide the necessary range of customer support functions in
the event that this vendor unexpectedly becomes unable or unwilling to provide these services to us.
Our failure to enforce and protect our proprietary rights could harm our business.
Our trade names, trademarks, service marks, patents, copyrights, domain names, and trade secrets are important to the success of our
businesses. In particular, we view our primary trademarks as critical to our success. We rely upon patent, trademark, copyright, trade secret, and
domain name laws in the U.S. and similar laws in other countries, as well as licenses and other agreements with our employees, members,
consumers, suppliers and other parties, to establish and maintain our proprietary rights in the technology, products, services and content used in
our operations. These laws and agreements may not guarantee that our proprietary rights will be protected and our proprietary rights could be
challenged or invalidated. We also license some of our intellectual property rights, including the Mercury Man logo, to third parties. The steps
we and such third parties have taken to protect our proprietary rights may not be adequate, and other third parties may infringe or misappropriate
our proprietary rights. The protection of our proprietary rights may require the expenditure of significant financial and
23