FTD.com 2011 Annual Report Download - page 27

Table of Contents
regulations, or the failure to comply with, or increased enforcement activity of, such laws and regulations, could significantly impact our
products and services, our costs, or the manner in which we or our advertisers conduct business, all of which could adversely impact our results
of operations and cause our business to suffer.
Our online nostalgia and online loyalty marketing services, as well as our FTD segment's consumer business, rely heavily on email
campaigns, and any disruptions or restrictions on the sending of emails or increase in the associated costs could adversely affect our
business, financial condition, results of operations, and cash flows.
Our emails have historically generated the majority of the traffic on our online nostalgia websites and are the most important driver of
member activity for our online loyalty marketing service. A significant number of members of our online nostalgia and online loyalty marketing
services elect to opt-
out of receiving certain types of emails. Without the ability to email these members, we have very limited means of inducing
members to return to our websites and utilize our services. In addition, each month, a significant number of email addresses for members of our
online nostalgia and online loyalty marketing services become invalid. This disrupts our ability to email these members and also prevents our
online nostalgia members from being able to contact these members, which is one of the reasons why members use our online nostalgia services.
Our FTD segment generates a significant portion of its consumer orders from the emails we send to customers who have previously ordered
products from us. We also engage in a number of third-
party email marketing campaigns in which such third parties include our marketing offers
in the emails they send.
An increase in the number of members or customers to whom we are not able to send emails, or who elect to not receive, or are unable to
receive, our emails could adversely affect our business, financial condition, results of operations, and cash flows. From time to time, Internet
service providers block bulk email transmissions or otherwise experience technical difficulties that result in our inability to successfully deliver
emails to our members or customers. Third parties may also block, impose restrictions on, or start to charge for, the delivery of emails through
their email systems. Due to the importance of email to our businesses, any disruption or restriction on the distribution of emails or increase in the
associated costs could materially and adversely affect our revenues and profitability.
We may be unsuccessful at acquiring additional businesses, services or technologies. Even if we complete an acquisition, it may not improve
our results of operations and may also adversely impact our business, financial condition and cash flows.
One of our strategic objectives is to acquire businesses, services or technologies that will provide us with an opportunity to diversify the
products and services we offer, leverage our assets and core competencies, or expand our geographic reach, or that otherwise may be
complementary to our existing businesses. However, acquiring companies is a difficult process with many factors outside of our control. In
addition, the credit agreement dated June 10, 2011, between FTD Group, Inc. and Wells Fargo Bank, National Association, as Administrative
Agent for the lenders (the "Credit Agreement"), imposes certain restrictions on our ability to complete acquisitions and there is no assurance that
we will be successful in completing additional acquisitions.
We have evaluated and expect to continue to evaluate, a wide variety of potential strategic transactions that we believe may complement
our current or future business activities. However, we cannot assure you that the anticipated benefits and synergies of an acquisition will
materialize or that any integration attempts will be successful. Acquiring a business, service or technology involves many operational and
financial risks, including risks relating to:
• disruption of our ongoing business and significant diversion of resources and management time from day-to-day responsibilities;
• acquisition financings that involve the issuance of potentially dilutive equity or the incurrence of debt;
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