RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

12 Months Ended

Dec. 31, 2011

RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18—RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

        Subsequent to the issuance of our 2010 consolidated financial statements, we determined that errors related to estimating and recording certain expenses existed in the consolidated statement of operations, statement of shareholders' equity and statement of cash flows for the year ended December 31, 2010. As a result of these errors, approximately $0.6 million of expenses, net of tax, were recorded in the year ended December 31, 2009 rather than the year ended December 31, 2010, resulting in accumulated deficit at December 31, 2009 being overstated by approximately $0.6 million and net loss for the year ended December 31, 2010 being understated by approximately $0.6 million. We assessed the materiality of these errors on our financial statements for the year ended December 31, 2010 in accordance with the SEC's Staff Accounting Bulletin ("SAB") No. 99 and concluded that the errors were not material to that period. In accordance with SAB No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements," we concluded to restate the consolidated statement of operations, statement of shareholders' equity and statement of cash flows for the year ended December 31, 2010 to correct these errors. The effects of the restatement on our consolidated statement of operations, statement of shareholders' equity and statement of cash flows for the year ended December 31, 2010 are shown below:

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 2010

	As Previously Presented			Adjustments			As Restated
	(In thousands)
Accumulated deficit balance as of December 31, 2009	$	(781,017	)	$	592		$	(780,425	)
Net loss for the year ended December 31, 2010		(17,585	)		(592	)		(18,177	)
Accumulated deficit balance as of December 31, 2010	$	(798,602	)	$	—		$	(798,602	)

CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2010

	As Previously Presented			Adjustments			As Restated
	(In thousands, except per share amounts)
Revenue	$	59,918		$	—		$	59,918
Costs and expenses (exclusive of depreciation shown separately below)
Cost of revenue		4,980			156			5,136
Selling and marketing expense		50,061			1,168			51,229
General and administrative expense		24,522			(22	)		24,500
Product development		3,488			(85	)		3,403
Litigation settlements and contingencies		963			—			963
Restructuring expense		2,780			—			2,780
Amortization of intangibles		1,232			—			1,232
Depreciation		3,216			—			3,216
Asset impairments		540			—			540
Total costs and expenses		91,782			1,217			92,999
Operating loss		(31,864	)		(1,217	)		(33,081	)
Other income (expense)
Interest income		8			—			8
Interest expense		(472	)		—			(472	)
Total other income (expense), net		(464	)		—			(464	)
Loss before income taxes		(32,328	)		(1,217	)		(33,545	)
Income tax benefit		6,195			746			6,941
Net loss from continuing operations		(26,133	)		(471	)		(26,604	)
Gain from sale of discontinued operations, net of tax		—			—			—
Income (loss) from operations of discontinued operations, net of tax		8,548			(121	)		8,427
Income (loss) from discontinued operations		8,548			(121	)		8,427
Net loss attributable to common shareholders	$	(17,585	)	$	(592	)	$	(18,177	)
Weighted average common shares outstanding		11,014			—			11,014
Weighted average diluted shares outstanding		11,014			—			11,014
Net loss per share from continuing operations
Basic	$	(2.38	)	$	(0.04	)	$	(2.42	)
Diluted	$	(2.38	)	$	(0.04	)	$	(2.42	)
Net income (loss) per share from discontinued operations
Basic	$	0.78		$	(0.01	)	$	0.77
Diluted	$	0.78		$	(0.01	)	$	0.77
Net loss per share attributable to common shareholders
Basic	$	(1.60	)	$	(0.05	)	$	(1.65	)
Diluted	$	(1.60	)	$	(0.05	)	$	(1.65	)

CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2010

	As Previously Presented			Adjustments			As Restated
	(In thousands, except per share amounts)
Cash flows from operating activities attributable to continuing operations:
Net loss	$	(17,585	)	$	(592	)	$	(18,177	)
Less loss (income) from discontinued operations, net of tax		(8,548	)		121			(8,427	)
Net loss from continuing operations		(26,133	)		(471	)		(26,604	)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities attributable to continuing operations:
Loss on disposal of fixed assets		85			—			85
Amortization of intangibles		1,232			—			1,232
Depreciation		3,216			—			3,216
Intangible impairment		540			—			540
Non-cash compensation expense		3,104			—			3,104
Non-cash restructuring expense		93			—			93
Non-cash contingent consideration gain		(928	)		—			(928	)
Deferred income taxes		(6,529	)		(414	)		(6,943	)
Bad debt expense		24			—			24
Changes in current assets and liabilities:
Accounts receivable		2,443			—			2,443
Prepaid and other current assets		225			—			225
Accounts payable and other current liabilities		(11,394	)		1,337			(10,057	)
Income taxes payable		(278	)		(332	)		(610	)
Deferred revenue		(64	)		—			(64	)
Other, net		2,612			—			2,612
Net cash provided by (used in) operating activities attributable to continuing operations		(31,752	)		120			(31,632	)
Cash flows from investing activities attributable to continuing operations:
Capital expenditures		(5,123	)		—			(5,123	)
Acquisitions		(250	)		—			(250	)
Other, net		2,193			—			2,193
Net cash used in investing activities attributable to continuing operations		(3,180	)		—			(3,180	)
Cash flows from financing activities attributable to continuing operations:
Issuance of common stock, net of withholding taxes		(570	)		—			(570	)
Purchase of treasury stock		(8,532	)		—			(8,532	)
Increase in restricted cash		(50	)		—			(50	)
Net cash used in financing activities attributable to continuing operations		(9,152	)		—			(9,152	)
Total cash provided by (used in) continuing operations		(44,084	)		120			(43,964	)
Net cash provided by (used in) operating activities attributable to discontinued operations		6,771			(120	)		6,651
Net cash used in investing activities attributable to discontinued operations		(2,103	)		—			(2,103	)
Net cash provided by financing activities attributable to discontinued operations		22,142			—			22,142
Total cash provided by discontinued operations		26,810			—			26,690
Net decrease in cash and cash equivalents		(17,274	)		—			(17,274	)
Cash and cash equivalents at beginning of period		86,093			—			86,093
Cash and cash equivalents at end of period	$	68,819		$	—		$	68,819