Classmates.com 2004 Annual Report Download - page 107

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settlement of all claims against Juno. The Debtor has filed a Notice of Appeal of the district court order upholding the decision of the Bankruptcy
Court approving the Stipulation of Settlement in the Second Circuit Court of Appeals. The appeal was argued on March 8, 2005 and the parties
are awaiting a decision from the court. At December 31, 2004, the Company had liabilities recorded of approximately $5.5 million.
On April 27, 2004, plaintiff MyMail Ltd. filed a lawsuit in the United States District Court for the Eastern District of Texas against
NetZero, Juno, NetBrands, America Online, Inc., AT&T, EarthLink, Inc., SBC Communications, Inc., and Verizon Communications, Inc.
alleging infringement of plaintiff's patent which purports to cover user access to a computer network. An answer and affirmative defenses have
been served on behalf of NetZero, Juno and NetBrands. Discovery is continuing and the court has set several dates for the parties to submit
briefs on claim construction issues. Trial has been set for October 2005.
The pending lawsuits involve complex questions of fact and law and may require the expenditure of significant funds and the diversion of
other resources to defend. Although the Company does not believe the outcome of the above outstanding legal proceedings, claims and litigation
will have a material adverse effect on its business, financial position, results of operations or cash flows, the results of litigation are inherently
uncertain and the Company can provide no assurance that it will not be materially and adversely impacted by the results of such proceedings.
The Company has established a reserve for the Freewwweb matter discussed above and such reserve is reflected in the consolidated financial
statements.
The Company is subject to various other legal proceedings and claims that arise in the ordinary course of business. Management believes
the amount and ultimate liability, if any, with respect to these actions will not materially affect the Company's business, financial position, results
of operations or cash flows. There can be no assurance, however, that such actions will not be material or adversely affect the Company's
business, financial position, results of operations or cash flows.
11. TRANSITION PERIOD COMPARATIVE DATA
The following table presents certain financial information for the six months ended December 31, 2003 and 2002, respectively (in
thousands, except per share amounts):
F-38
Six Months Ended
December 31,
2003
2002
(unaudited)
Revenues
$
185,738
$
123,868
Income before income taxes
$
35,046
$
6,928
Provision for income taxes
$
1,719
$
692
Net income
$
33,327
$
6,236
Net income per share
—
basic
$
0.52
$
0.10
Net income per share
—
diluted
$
0.48
$
0.09
Shares used to calculate basic net income per share
64,163
60,830
Shares used to calculate diluted net income per share
69,504
66,179