Juno 2012 Annual Report Download - page 48

Table of Contents
arise, if any. In the event that the Multistate Work Group and we agree to settle this matter, or if no settlement is reached and there are
adverse judgments against us in connection with litigation filed by the Attorneys General of the Multistate Work Group, there could be a
material adverse effect on our financial position, results of operations and our 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. We believe that by joining the Multistate Work Group, the Attorney General's investigation may
have been consolidated into the Multistate Work Group's inquiry.
We cannot predict the outcome of these or any other governmental investigations or other legal actions or their potential implications for our
business. There are no assurances that additional governmental investigations or other legal actions will not be instituted in connection with our former
post-transaction sales practices or other current or former business practices.
We record a liability when we believe that it is both probable that a loss will be incurred, and the amount of loss can be reasonably estimated. We
evaluate, at least quarterly, developments in our legal matters that could affect the amount of liability that has been previously accrued, and make
adjustments as appropriate. Significant judgment is required to determine both probability and the estimated amount. We 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, we had a reserve of
$0.7 million for the settlement of the Michaels class action. With respect to the other legal matters described above, we have determined, based on our
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 our
control. As such, there can be no assurance that the final outcome of these matters will not materially and adversely affect our business, financial
condition, results of operations, or cash flows.

Not applicable.
46