Classmates.com 2011 Annual Report Download - page 28

Table of Contents
• reduction of cash and other resources available for operations and other uses;
•
exposure to risks specific to the acquired business, service or technology to which we are not currently exposed;
• risks of entering markets in which we have little or no direct prior experience;
• unforeseen obligations or liabilities;
•
difficulty assimilating the acquired customer bases, technologies and operations;
•
difficulty assimilating and retaining management and employees of the acquired business;
• potential impairment of relationships with users, customers or vendors as a result of changes in management of the acquired
business or other factors;
•
large write
-
offs either at the time of the acquisition or in the future, the incurrence of restructuring and other exit costs, the
amortization of identifiable intangible assets, and the impairment of amounts capitalized as goodwill, intangible assets and other
long-lived assets; and
•
lack of, or inadequate, controls, policies and procedures appropriate for a public company, and the time, cost and difficulties
related to the implementation of such controls, policies and procedures or the remediation of any deficiencies.
Any of these risks could harm our business, financial condition, results of operations, and cash flows.
In addition, an acquisition of a foreign business involves risks in addition to those set forth above, including risks associated with foreign
currency exchange rates, potentially unfamiliar economic, political and regulatory environments, and integration difficulties due to language,
cultural and geographic differences.
FTD has a substantial amount of indebtedness which could adversely affect our ability to raise additional capital to fund operations, our
flexibility in operating our business and our ability to react to changes in the economy or our industry.
FTD has a substantial amount of indebtedness which could have important consequences for our business and financial condition. For
example:
•
If we fail to meet payment obligations or otherwise default under the Credit Agreement, the lenders will have the right to
accelerate the indebtedness and exercise other rights and remedies against us.
• 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 needs, capital expenditures, additional acquisitions, and
other general corporate requirements could be limited.
•
The 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 Credit Agreement, including failure as a result of events beyond our control,
could result in an event of default under the Credit Agreement,
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