Nutrisystem 2006 Annual Report Download - page 20

•
dependence on key management personnel of acquired or newly started businesses and the risk that we
w
ill b
e una
bl
eto
i
ntegrate or reta
i
n suc
h
personne
l
;
•
the risk that the new products or services we ma
y
introduce or be
g
in offerin
g
, whether as a result of
i
nternal expansion or business acquisitions, will not gain acceptance among consumers and existin
g
c
ustomers
;
•
the risk that new efforts ma
y
have a detrimental effect on our brand;
•
the risk that we will face competition from established or larger competitors in the new markets w
e
m
ay enter, w
hi
c
h
cou
ld
a
d
verse
l
ya
ff
ect t
h
e
fi
nanc
i
a
l
per
f
ormance o
f
any
b
us
i
nesses we m
i
g
h
t acqu
i
r
e
or start; an
d
•
the risk that the anticipated benefits of any acquisition or of the commencement of any new busines
s
m
ay not
b
e rea
li
ze
d
,
i
nw
hi
c
h
event we w
ill
not
b
ea
bl
etoac
hi
eve any return on our
i
nvestment
i
nt
h
a
t
n
ew business.
If
we do not cont
i
nue to rece
i
ve re
f
errals
f
rom ex
i
st
i
n
g
customers, our customer acqu
i
s
i
t
i
on cost ma
y
i
n
c
r
ease
.
We rel
y
on word of mouth advertisin
g
for a portion of our new customers. If our brand suffers or the
number of customers acquired through referrals drops due to other circumstances, our costs associated with
a
cqu
i
r
i
ng new customers an
d
generat
i
ng revenue w
ill i
ncrease, w
hi
c
h
w
ill
,
i
n turn,
h
ave an a
d
verse a
ff
ect on ou
r
profitabilit
y
.
W
e use s
p
okes
p
ersons to
p
romote our
p
roducts. I
f
these s
p
okes
p
ersons su
ff
er adverse
p
ubl
i
c
i
t
y
,ou
r
r
evenue could be adversel
y
a
ff
ected.
O
ur marketin
g
strate
gy
depends in part on celebrit
y
spokespersons, such as Dan Marino, Don Shula, Zor
a
Andrich and Kat Carney, as well as customer spokespersons to promote our weight management program. Any
of
t
h
ese spo
k
espersons may
b
ecome t
h
esu
bj
ect o
f
a
d
verse news reports, negat
i
ve pu
bli
c
i
ty or ot
h
erw
i
se
be
a
lienated from a se
g
ment of our customer base, whether wei
g
ht loss related or not. If so, such events ma
y
reduce
the effectiveness of his or her endorsement and, in turn, adversely affect our revenue and results of operations
.
If
we cannot protect and en
f
orce our trademarks and other
i
ntellectual property r
i
ghts, our brand and our
b
usiness will suffer
.
We believe that our trademarks and other proprietary rights are important to our success and competitiv
e
pos
i
t
i
on. T
h
e act
i
ons we ta
k
e to esta
bli
s
h
an
d
protect our tra
d
emar
k
san
d
ot
h
er propr
i
etary r
i
g
h
ts may prove to
b
e
inadequate to prevent imitation of our products or services or to prevent others from claimin
g
violations of thei
r
trademarks and proprietary rights by us. In addition, others may develop similar trademarks or other intellectual
property
i
n
d
epen
d
ent
l
y or assert r
i
g
h
ts
i
n our tra
d
emar
k
san
d
ot
h
er propr
i
etary r
i
g
h
ts. I
f
so, t
hi
r
d
part
i
es ma
y
seek to block or limit sales of our products and services based on alle
g
ations that use of some of our marks or
o
ther intellectual property constitutes a violation of their intellectual property rights. If we cannot protect ou
r
tra
d
emar
k
san
d
ot
h
er
i
nte
ll
ectua
l
property r
i
g
h
ts, or
if
our tra
d
emar
k
sorot
h
er
i
nte
ll
ectua
l
property r
i
g
h
ts
i
n
f
r
i
nge
the ri
g
hts of third parties, the value of our brand ma
y
decline, which would adversel
y
affect our results o
f
op
erations.
W
e are de
p
endent on our
C
h
i
e
f
Execut
i
ve
Offi
cer and other ke
y
execut
i
ve o
ffi
cers
f
or
f
uture success.
O
ur future success depends to a si
g
nificant de
g
ree on the skills, experience and efforts of Michael J. Ha
g
an,
o
ur Chief Executive Officer, and other key executive officers. The loss of the services of any of these individual
s
cou
ld h
arm our
b
us
i
ness. On
l
y one o
f
our
k
ey execut
i
ve o
ffi
cers, T
h
omas F. Connerty,
h
as an emp
l
oyment
ag
reement with us. In addition, we have not obtained life insurance on an
y
ke
y
executive officers. If an
y
ke
y
executive officers left us or were seriously injured and became unable to work, the business could be harmed.
14