Juno 2012 Annual Report Download - page 170

Table of Contents
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amount of possible loss or range of loss that may arise, if any. In the event that the Multistate Work Group and the Company agree to
settle this matter, or if no settlement is reached and there are adverse judgments against the Company in connection with litigation filed
by the Attorneys General of the Multistate Work Group, there could be a material adverse effect on the Company's financial position,
results of operations and its cash flows.
•In 2010, Classmates Online, Inc. received a subpoena from the Attorney General for the District of Columbia regarding the subsidiary's
marketing, billing, and renewal practices, including, without limitation, its former post-transaction sales practices. The parties have
entered into discussions in an effort to reach a negotiated resolution. In the meantime, Classmates Online, Inc. is continuing to cooperate
with the Attorney General and is providing requested information.
•In 2011, Classmates Online, Inc. received a civil investigative demand from the Attorney General for the State of Washington regarding
its marketing, refund, cancelation, and renewal practices. Prior to that, in 2009, Classmates Online, Inc. had received a civil investigative
demand from the Attorney General for the State of Washington regarding certain post-transaction sales practices in which it had
previously engaged with certain third-party vendors. In 2012, the Attorney General for the State of Washington joined the
aforementioned Multistate Work Group. The Company believes that by joining the Multistate Work Group, the Attorney General's
investigation may have been consolidated into the Multistate Work Group's inquiry.
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 records a liability when it believes that it is both probable that a loss will be incurred, and the amount of loss can be reasonably
estimated. The Company evaluates, at least quarterly, developments in its legal matters that could affect the amount of liability that has been previously
accrued, and makes adjustments as appropriate. Significant judgment is required to determine both probability and the estimated amount. The Company
may be unable to estimate a possible loss or range of possible loss due to various reasons, including, among others: (i) if the damages sought are
indeterminate; (ii) if the proceedings are in early stages, (iii) if there is uncertainty as to the outcome of pending appeals, motions or settlements, (iv) if
there are significant factual issues to be determined or resolved, and (v) if there are novel or unsettled legal theories presented. In such instances, there is
considerable uncertainty regarding the ultimate resolution of such matters, including a possible eventual loss, if any. At December 31, 2012, the
Company had a reserve of $0.7 million for the settlement of the Michaels class action. With respect to the other legal matters described above, the
Company has determined, based on its current knowledge, that the amount of possible loss or range of loss, including any reasonably possible losses in
excess of amounts already accrued, is not reasonably estimable. However, legal matters are inherently unpredictable and subject to significant
uncertainties, some of which are beyond the Company's control. As such, there can be no assurance that the final outcome of these matters will not
materially and adversely affect the Company's business, financial condition, results of operations, or cash flows.
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