Classmates.com 2010 Annual Report Download - page 28

Table of Contents
• we will be required to dedicate a substantial portion of FTD's cash flow from operations to payments on the debt, thereby
reducing funds available for working capital, capital expenditures, dividends, acquisitions, and other purposes;
• our ability to obtain additional financing to fund future working capital, capital expenditures, additional acquisitions, and other
general corporate requirements could be limited;
•
the FTD Credit Agreement imposes operating and financial covenants and restrictions on FTD, including limitations on our
ability to use FTD cash flow for the benefit of our subsidiaries other than FTD, and compliance with such covenants and
restrictions may adversely affect our ability to adequately finance our operations or capital needs in the future, to pursue attractive
business opportunities that may arise in the future, to redeem or repurchase capital stock, to pay dividends, to sell assets, and to
make capital expenditures;
• our failure to comply with the covenants in the FTD Credit Agreement, including failure as a result of events beyond our control,
could result in an event of default under the credit agreement, which could cause all amounts outstanding with respect to that debt
to become immediately due and payable and could materially and adversely affect our operating results, financial condition and
liquidity;
•
we will experience increased vulnerability to, and limited flexibility in planning for, changes to our businesses and adverse
economic and industry conditions;
• we could be placed at a competitive disadvantage relative to other companies with less indebtedness;
•
our ability to apply excess FTD 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 FTD Credit Agreement 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 FTD Credit Agreement, 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.
The FTD Credit Agreement includes guarantees on a joint and several basis by FTD Group, Inc.'s existing and future, direct and indirect
domestic subsidiaries and is secured by first priority security interests in, and mortgages on, substantially all of FTD Group, Inc.'s direct and
indirect subsidiaries' tangible and intangible assets and first priority pledges of all the equity interests owned by FTD Group, Inc. in its 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 FTD Credit Agreement could permit the lenders to terminate the
commitments of such lenders to make further extensions of credit under the FTD Credit Agreement, 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 and certain business initiatives such as
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