Goodwill is not subject to amortization and is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”, or SFAS 142. The impairment test consists of a comparison of the fair value of goodwill with its carrying amount. If the carrying amount of goodwill exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess. Fair value is typically based upon future cash flows discounted at a rate commensurate with the risk involved. After an impairment loss is recognized, the adjusted carrying amount of goodwill is its new accounting basis. (See Note 2 – Goodwill).

Certain reclassifications have been made in the prior period condensed consolidated financial statements to conform to the current period presentation.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates and assumptions made by iVillage include those related to the useful lives of fixed assets and intangible assets, the recoverability of fixed assets, goodwill, intangible assets and deferred tax assets, the allowance for doubtful accounts and the assessment of expected probable losses (if any) of claims and potential claims.

In the ordinary course of business, iVillage utilizes estimates to determine the accrual of certain operating expenses. These estimates are reviewed on an ongoing basis to determine the adequacy of these accruals. iVillage reversed approximately $0.3 million of accruals included in operating expenses primarily due to the renegotiation of a vendor contract with substantial changes in the terms and conditions of the original contract which provided a one-time benefit in each of the three and six months ended June 30, 2004. iVillage reversed no amount and approximately $0.1 million due to changes in estimates previously provided for in the three and six months ended June 30, 2003, respectively. These amounts were offset by additional accruals for various operating expenses.

Basic net income/(loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income/(loss) per share is computed using the weighted-average number of common shares and common stock equivalents outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is anti-dilutive.

Included in the June 30, 2004 and June 30, 2003 calculation of weighted average number of shares of common stock outstanding are 58,394 shares and 189,404 shares, respectively, which have not been issued. These shares are being held, respectively, for former Women.com Networks, Inc., or Women.com, and Promotions.com stockholders that have not yet exchanged their respective shares for shares of iVillage during the periods presented, but are entitled to do so.

Stock options and warrants in the amount of 901,811 shares for the three months ended June 30, 2004, were not included in the computation of diluted net income per share as they were anti-dilutive. Stock options and warrants in the amount of 8,445,590 shares for the six months ended June 30, 2004, were not included in the computation of diluted net loss per share as they were anti-dilutive as a result of net losses during the period. Stock options and warrants in the amount of 12,157,010 shares for each of the three and six months ended June 30, 2003, were not included in the computation of diluted net loss per share as they were anti-dilutive as a result of net losses during the periods presented.