NetZero 2011 Annual Report Download - page 24

Table of Contents
currencies and, in particular, to the British Pound and the Euro, has had, and in future periods could have, an adverse effect on the comparisons
of our revenues and operating income against prior periods. We cannot accurately predict the impact of future foreign currency exchange rate
fluctuations on our operating results, and such fluctuations could negatively impact the comparisons of such results against prior periods.
Significant problems with our key systems or those of our third
-party vendors could have a material adverse effect on our business, financial
condition, results of operations, and cash flows.
The systems underlying the operations of each of our business segments are complex and diverse, and must efficiently integrate with third-
party systems, such as credit card processors. Key systems include, without limitation, order transmission, fulfillment and processing, including
the system for transmitting orders through the floral network; billing; website and database management; customer support; telecommunications
network management; advertisement serving and management systems; and internal financial systems. Some of these systems, such as customer
support for our Content & Media and Communications segments, are outsourced to third parties, and other systems, such as FTD's order
transmission and fulfillment system and the platform for our international online nostalgia websites, are not fully redundant. We have
experienced systems problems in the past, and we or these third parties may experience problems in the future. In addition, if these third parties
face financial or other difficulties, our business could be adversely impacted. Any significant errors, failures, interruptions, delays, or other
problems with our systems or our third-party vendors or their systems could have a material adverse effect on our business, financial condition,
results of operations, and cash flows.
In addition, our Content & Media and Communications businesses outsource a majority of their live technical and billing support functions.
These businesses rely on one customer support vendor, and we maintain only a small number of internal customer support personnel for these
businesses. Our internal customer support personnel are not equipped to provide the necessary range of customer support functions in the event
that this vendor unexpectedly becomes unable or unwilling to provide these services to us.
Legal actions or investigations could subject us to substantial liability, require us to change our business practices, and adversely affect our
business, financial condition, results of operations, and cash flows.
We are currently, and have been in the past, party to various legal actions and investigations. These actions may include, without limitation,
claims by private parties in connection with consumer protection and other laws, claims that we infringe third-party patents, trademarks,
copyrights or other intellectual property or proprietary rights, securities laws claims, claims involving marketing practices or unfair competition,
claims in connection with employment practices, breach of contract claims, and other business-related claims. The nature of our business could
subject us to additional claims for similar matters, as well as a wide variety of other claims including, without limitation, claims for defamation,
right of publicity, negligence, and privacy and security matters. The failure to successfully defend against these and other types of claims,
including claims relating to our business practices, could result in our incurring significant liabilities related to judgments or settlements or
require us to change our business practices. Infringement claims may also result in our being required to obtain licenses from third parties, which
licenses may not be available on acceptable terms, if at all. Both the cost of defending claims, as well as the effect of settlements and judgments,
could cause our results of operations to fluctuate significantly from period to period and could materially and adversely affect our business,
financial condition, results of operations, and cash flows.
Various governmental agencies have in the past, and may in the future, assert claims, institute legal actions, inquiries or investigations, or
impose obligations relating to our business practices, such as our marketing, billing, customer retention, renewal, cancelation, refund, or
disclosure practices. The Federal
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