Classmates.com 2009 Annual Report Download - page 28

Table of Contents
• our ability to apply excess cash flow or proceeds from certain types of securities offerings, asset sales and other transactions to
purposes other than the repayment of debt, as well as servicing of the debt, could be limited;
• the interest rates under the credit agreements will fluctuate and, accordingly, interest expense may increase; and
• if we make voluntary prepayments on our debt, we will have to accelerate the related discount accretion and debt issuance cost
amortization, which would impact interest expense, and certain prepayments may be subject to penalties.
Under the terms of the credit agreements, we will be permitted to incur additional indebtedness subject to certain conditions, and the risks
described above may be increased if we incur additional indebtedness.
Our credit agreements include guarantees on a joint and several basis by our existing and future, direct and indirect domestic subsidiaries
and are secured by first priority security interests in, and mortgages on, substantially all of our direct and indirect subsidiaries' tangible and
intangible assets and first priority pledges of all the equity interests owned by us in our existing and future direct and indirect subsidiaries (except
with respect to foreign subsidiaries in which case such pledges are limited to 66% of the outstanding capital stock). The occurrence of an event
of default under the credit agreements could permit the lenders to terminate the commitments of such lenders to make further extensions of credit
under the credit agreements, to call and enforce the guarantees, and to foreclose on the collateral securing such debt.
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 expense certain costs or impair our assets.
We have capitalized goodwill and identifiable intangible assets in connection with our acquisitions. We perform an impairment test of our
goodwill and indefinite-lived intangible assets 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 or any such assets might be permanently impaired. If our acquisitions are not
commercially successful or, if due to economic or other conditions, our assumptions regarding the performance of the acquired businesses are
not achieved, we would likely be required to record impairment charges which would negatively impact our financial condition and results of
operations. We have experienced impairment charges in the past, and in the fourth quarter of 2008, we recorded material impairment charges
related to our FTD segment's goodwill and indefinite-lived intangible assets. Given the current economic environment and the uncertainties
regarding the impact on our businesses, there can be no assurance that our estimates and assumptions regarding the duration of the depressed
economic conditions, or the period or strength of recovery, made for purposes of our goodwill and identifiable intangible assets impairment
testing will prove to be accurate predictions of the future. If our assumptions regarding forecasted revenue or growth rates of certain reporting
units or other factors are not achieved or are revised downward, we may be required to record additional impairment charges in future periods. In
addition, from time to time, we record tangible or intangible 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
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