Classmates.com 2009 Annual Report Download - page 38

Table of Contents
Our Internet access business is dependent on the availability of telecommunications services and compatibility with third-party systems
and products.
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 condition, results of operations, and cash flows could be materially and adversely affected.
Our dial-up Internet access services also rely on their compatibility with other third-party systems, products and features, including
operating systems. Incompatibility with third-party systems and products could adversely affect our ability to deliver our services or a user's
ability to access our services and could also adversely impact the distribution channels for our services. Our services are dependent on dial-up
modems and an increasing number of computer manufacturers, including certain manufacturers with whom we have distribution relationships,
do not pre-load their new computers with dial-up modems, requiring the user to separately acquire a modem to access our services. There can be
no assurance that, as the dial-up Internet access market declines and new technologies emerge, we will be able to continue to effectively
distribute and deliver our services.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our corporate headquarters are located in Woodland Hills, California and consist of leased space of approximately 0.1 million square feet.
We also lease office space in 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 leases space for call center facilities in
Centerbrook, Connecticut; Medford, Oregon; Sherwood, Arkansas; and Nottingham, England. We also lease warehouse space in a distribution
center in Naperville, 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 segment. 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 15—"Commitments and
Contingencies" to our Consolidated Financial Statements included in this Annual Report on Form 10-K.
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