Classmates.com 2010 Annual Report Download - page 31

Table of Contents
Our businesses could be shut down or severely impacted by a catastrophic event.
Our businesses could be materially and adversely affected by a catastrophic event. A disaster such as a fire, earthquake, flood, power loss,
terrorism, or other similar event, affecting any of our facilities, data centers or computer systems, or those of our third-
party vendors, or a system
interruption or delay that slows down the Internet or makes the Internet or our websites temporarily unavailable, could result in a significant and
extended disruption of our operations and services. Any prolonged disruption of our services due to these or other events would severely impact
our businesses. We do not carry flood insurance for certain of our facilities, and the property, business interruption and other insurance we do
carry may not be sufficient to cover, if at all, losses that may occur as a result of any events which cause interruptions in our services.
We cannot predict our future capital needs and we may not be able to secure additional financing which could adversely impact us.
We may need to raise additional funds in the future to fund our operations, for acquisitions of businesses, services or technologies or for
other purposes. Additional financing may not be available in a timely manner, on terms favorable to us, or at all. We incurred substantial
indebtedness in connection with the acquisition of FTD. The terms of such indebtedness in addition to the degree to which we are leveraged, will
adversely affect our ability to obtain additional financing. In addition, the current extreme volatility of, and disruption in, the securities and credit
markets may restrict our ability to raise any such additional funds. If adequate funds are not available or not available when required and in
sufficient amounts or on acceptable terms, our businesses and future prospects may suffer.
We have anti-takeover provisions that may make it difficult for a third party to acquire us.
Provisions of our certificate of incorporation, our bylaws and Delaware law could make it difficult for a third party to acquire us, even if
doing so might be beneficial to our stockholders because of a premium price offered by a potential acquirer. We have a stockholder rights plan,
which is an anti-takeover measure that is intended to cause substantial dilution to any third party who attempts to acquire our Company on terms
not approved by our Board of Directors. Our Board of Directors recently voted to terminate such stockholder rights plan as of February 28, 2011.
However, there are no assurances that our Board of Directors will not implement a new stockholder rights plan in the future.
Our stock price has been highly volatile and may continue to be volatile.
The market price of our common stock has fluctuated significantly and it may continue to be volatile with extreme trading volume
fluctuations. In addition, The Nasdaq Global Select Market has experienced substantial price and trading volume fluctuations. The broad market
and industry factors that influence or affect such fluctuations may harm the market price of our common stock, regardless of our actual operating
performance. As a result of these or other reasons, we have experienced and may continue to experience significant volatility in the market price
of our common stock.
ADDITIONAL RISKS RELATING TO OUR FTD SEGMENT
Competition could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
We compete in the market for flowers and, to a lesser degree, gifts. In the consumer market, consumers are our customers for direct sales of
floral products and gifts through our websites and telephone numbers. In the floral network services market, retail florists and supermarkets are
our principal customers for memberships and subscriptions to our various floral network services, including access to the FTD and Interflora
brands and the Mercury Man logo, access to the floral networks,
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