Juno 2012 Annual Report Download - page 23

Table of Contents
would be taxable to such stockholder as a dividend to the extent of United Online's current and accumulated earnings and profits. Any amount that
exceeded United Online's earnings and profits would be treated first as a non-taxable return of capital to the extent of such stockholder's tax basis in its
shares of United Online, Inc. stock with any remaining amount being taxed as a capital gain. In addition, United Online would recognize a taxable gain
in an amount equal to the excess, if any, of the fair market value of the shares of common stock of FTD held by United Online, Inc. on the distribution
date over United Online, Inc.'s tax basis in such shares.
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
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Economic conditions in the U.S. and the European Union have been depressed and may remain challenging for the foreseeable future. Our
products and services are discretionary and dependent upon levels of consumer spending. Consumer spending patterns are difficult to predict and are
sensitive to, among other factors, the general economic climate, the consumers' levels of disposable income, consumer debt, and overall consumer
confidence. The challenging economic conditions have adversely impacted certain aspects of our businesses in a number of ways, including reduced
demand, more aggressive pricing for similar products and services by our competitors, decreased spending by advertisers, increased credit risks,
increased credit card failures, a loss of customers, and increased use of discounted pricing for certain of our products and services. It is likely that these
and other factors will continue to adversely impact our businesses, at least in the near term. The challenging economic conditions may adversely impact
our key vendors. Such economic conditions and decreased consumer spending have, in certain cases, resulted in, and may in the future result in, a
variety of negative effects such as a reduction in revenues, increased costs, lower gross margin and operating margin percentages, increased allowances
for doubtful accounts and write-offs of accounts receivable, increased provisions for excess and obsolete inventories, and recognition of impairments of
assets, including goodwill and other intangible and long-lived assets. Any of the above factors could have a material adverse effect on our business,
financial condition, results of operations, and cash flows.
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Our results of operations and changes in our key business metrics from period to period have varied in the past and may fluctuate significantly in
the future due to a variety of factors, many of which are outside of our control and difficult to predict. Each of the risk factors discussed in this Item 1A
and the other factors described elsewhere in this Annual Report on Form 10-K and in our other filings with the SEC may affect us from period to period
and may affect our long-term performance. As a result, you should not rely on period-to-period comparisons as an indication of our future performance.
In addition, these factors and the challenging economic conditions create difficulties with respect to our ability to forecast our financial performance and
business metrics accurately. We believe that these difficulties in forecasting present even greater challenges for financial analysts who publish their own
estimates of our future financial results and business metrics. We cannot assure you that we will achieve the expectations of, or projections made by, our
management or the financial analysts. In the event we do not achieve such expectations or projections, our financial results and the price of our common
stock could be adversely affected.
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 
We have expended, and may continue to expend, significant resources in developing, integrating and implementing new business initiatives,
products, services, features, applications, and functionality, such as those related to the NetZero 4G mobile broadband service, our high school
yearbook initiatives
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