Classmates.com 2010 Annual Report Download - page 149

Table of Contents
UNITED ONLINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. COMMITMENTS AND CONTINGENCIES (Continued)
Multistate Work Group that consists of the Attorneys General for the following states: Delaware, Florida, Idaho, Illinois, Kansas, Maine,
Maryland, Michigan, New Mexico, New Jersey, North Dakota, Ohio, Oregon, Pennsylvania, Texas, and Vermont. Based on the demand and the
subpoenas, the Company believes that the primary focus of the inquiries concerns certain post-transaction sales practices in which these
subsidiaries previously engaged with certain third-party vendors. In addition, in 2010, Classmates Online, Inc. received a subpoena from the
Attorney General for the District of Columbia regarding its marketing, billing, and renewal practices, including, without limitation, its post-
transaction sales practices. The Company has been cooperating with these investigations. However, the Company cannot predict the outcome of
these or any other governmental investigations or other legal actions or their potential implications for its business. There are no assurances that
additional governmental investigations or other legal actions will not be instituted in connection with the Company's former post-transaction
sales practices or other current or former business practices.
The Company is subject to various legal proceedings, investigations, claims, and litigation that can involve complex questions of fact and
law and may require the expenditure of significant funds and the diversion of other resources to defend. There can be no assurance that such
legal proceedings, investigations, claims, and litigation, which are inherently uncertain, will not materially and adversely affect the Company's
business, financial condition, results of operations, or cash flows. At December 31, 2010, the Company had a reserve of $2.2 million for a
pending lawsuit.
15. QUARTERLY FINANCIAL DATA (UNAUDITED) (in thousands, except per share data)
F-43
Quarter Ended
December 31, September 30, June 30, March 31,
Year ended December 31, 2010:
Revenues
$
232,601
$
193,541
$
242,686
$
251,725
Cost of revenues
$
109,164
$
84,394
$
114,895
$
121,198
Operating income
$
31,415
$
25,607
$
29,836
$
25,832
Net income
$
16,350
$
12,159
$
13,957
$
11,221
Net income applicable to common
stockholders
$
15,487
$
11,412
$
13,098
$
10,494
Basic net income per common share
$
0.18
$
0.13
$
0.15
$
0.12
Diluted net income per common share
$
0.18
$
0.13
$
0.15
$
0.12
Quarter Ended
December 31,
September 30,
June 30,
March 31,
Year ended December 31, 2009:
Revenues
$
249,490
$
216,206
$
260,789
$
263,647
Cost of revenues
$
110,015
$
84,561
$
108,449
$
114,334
Operating income
$
32,801
$
32,674
$
43,114
$
37,404
Net income
$
17,610
$
16,155
$
19,267
$
17,053
Net income applicable to common
stockholders
$
16,456
$
14,933
$
17,687
$
16,382
Basic net income per common share
$
0.19
$
0.18
$
0.21
$
0.20
Diluted net income per common share
$
0.19
$
0.18
$
0.21
$
0.20