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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

OR

Commission file number 000-25469

iVillage Inc.

(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: (212) 600-6000

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value
(Title of Class)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ý    No o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).    Yes ý    No o

        The aggregate market value of the issued and outstanding voting stock held by non-affiliates of the registrant, based upon the closing sale price of the Common Stock on June 30, 2004 (the last business day of the registrant's most recently completed second fiscal quarter), as reported on The Nasdaq National Market, was approximately $232,079,019. Shares of Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock (without reference to Exchange Act Regulation 13D-G's definition of "beneficial ownership") have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

        As of March 15, 2005, the registrant had outstanding 71,912,719 shares of Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

        Portions of the definitive Proxy Statement for the Company's 2005 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.

iVillage Inc.

FORM 10-K

TABLE OF CONTENTS

TRADEMARKS

        iVillage®, iVillage.com®, gURL.com®, GardenWeb®, Healthology®, Newborn Channel®, Parent Soup®, ParentsPlace.com®, WebStakes.com®, iVillage Consulting®, and iVillage Solutions® are registered trademarks of iVillage Inc. The stylized iVillage logo, "the Internet for Women", Astrology.com, Substance.com, Baby Steps, Public Affairs Group, Inc., Business Women's Network, Business Women's Network Government, Diversity Best Practices, Best Practices In Corporate Communications, Promotions.com, and iVillageAccess are trademarks of iVillage Inc. All other brand names, trademarks or service marks referred to in this report are the property of their owners.

PART I

        Statements in this Annual Report on Form10-K, including statements contained in "Item 1. Business" and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations", constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or Exchange Act. The words or phrases "can be", "expects", "may affect", "may depend", "anticipates", "believes", "estimates", "plans", "projects", and similar words and phrases are intended to identify such forward-looking statements. These forward-looking statements are subject to various known and unknown risks and uncertainties and we caution you that any forward-looking information provided by or on behalf of us is not a guarantee of future results, performance or achievements. Actual results could differ materially from those anticipated in these forward-looking statements due to a number of factors, some of which are beyond our control. In addition to the risks discussed below in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and in our other public filings, press releases and statements by our management, factors that may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied in such forward looking statements include:

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the volatile and competitive nature of the media industry, in particular the Internet;



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changes in domestic and foreign economic, political and market conditions;



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the effect of federal, state and foreign regulation on our business;



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the impact of recent and future acquisitions and joint ventures on our business and financial condition;



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our ability to establish and maintain relationships with advertisers, sponsors, and other third-party providers and partners; and



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the impact of pending litigation on our business and financial condition.

        All forward-looking statements in this report are current only as of the date on which the statements were made. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any statement is made or to reflect the occurrence of unanticipated events.

        When used in this Annual Report on Form 10-K and unless otherwise specified, "iVillage," "we," "our" and "us" refer to iVillage Inc. and its consolidated subsidiaries.

Item 1.    Business.

Overview

        Founded in 1995, iVillage is "the Internet for women" and consists of several online and offline media-based properties, including the iVillage.com Web site, or iVillage.com, Women.com Networks, Inc., operator of the Women.com Web site, or Women.com, the gURL.com Web site, or gURL.com, Knowledgeweb, Inc., operator of the Astrology.com Web site, or Astrology.com, Cooperative Beauty Ventures, LLC, operator of the Substance.com Web site, or Substance.com, The Virtual Mirror, Inc., operator of the GardenWeb.com Web site, or GardenWeb.com, Healthology, Inc., or Healthology, iVillage Parenting Network, Inc., or IVPN, Public Affairs Group, Inc., or PAG,

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Promotions.com, Inc., or Promotions.com, iVillage Consulting and iVillageSolutions. Following is a synopsis of our operational activities and those of our subsidiaries and divisions:

        We organize our online network to address multiple topics of high importance to females at different age levels, and we seek to enrich their lives through our offerings of unique content, community applications, tools and interactive features. We facilitate use across our content areas by providing a similar look and feel within each area and across our network in general, resulting in consistent and strongly branded Web sites. Membership to iVillage.com is free and provides features such as message boards and other community tools.

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        We believe we are an industry leader in developing innovative sponsorships that match the desire of marketers to reach women and parents with the needs of iVillage.com users to obtain relevant information, products and services. We leverage our online brand awareness by offering books, videos, and other consumer products and services under the iVillage, gURL.com, Lamaze and Business Women's Network brands.

        Most of our Web sites are consistently recognized as leading online offerings. According to comScore Media Metrics' January 2005 results:

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We had approximately 19 million unique users to iVillage.com and our affiliate Web sites in the month of January 2005, reaching approximately 12% of the total United States online population;



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iVillage.com was the 26th most visited Web site on the Internet in the United States;



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iVillage.com continues to be ranked the #1 Community-Women Site and the #2 overall Community Site on the Internet;



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gURL.com was ranked in the top ten in the Community-Teens Site category;



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iVillage's astrological Web sites, including Astrology.com, were ranked #11 in the Hobbies/Lifestyle category;



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Substance.com remained the #1 content destination online in the Retail-Fragrances/Cosmetics category; and



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iVillage Parenting, the combined online properties of iVillage.com and IVPN, was ranked the #11 site in the Community-Family category.

iVillage.com

Content Areas

        iVillage.com is organized around content specific areas that focus on issues of importance to females and provides interactive services, peer support, online access to experts and tailored shopping opportunities. iVillage.com is updated daily to promote content and community. The following table provides a brief description of the features of each of our content areas as of December 31, 2004:

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Site Redesign

        In January 2005, we completed a total redesign of the iVillage.com Web site. The changes to iVillage.com were intended to provide a fresher design, easier-to-use navigation, enhanced functionality and additional images and streaming video. Although all of our previous content offerings remain available on iVillage.com, our content areas have been streamlined into the following categories:

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Beauty & Style;



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Health & Well-Being;



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Diet & Fitness;



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Love & Sex;



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Pregnancy & Parenting;



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House & Home;



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Entertainment; and



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Magazines.

        Within each of these categories, an emphasis has been made to provide our users with timely columns and news, trend reports, additional contributors and experts, and customizable tools and features. We have also expanded our content offerings through strategic relationships with third parties. For example, in January 2005, we entered into an agreement with the University of California to provide online the Berkeley Wellness Letter, a publication of the University of California's Berkeley Public Health Center that provides nutrition, fitness and well-being content to our Health & Well-Being category.

        The Web site redesign is also intended to enhance our sponsorship and advertisement opportunities on iVillage.com. We can now offer our sponsors and advertisers additional placements,

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different forms of advertisements and dynamic ad serving. With dynamic ad serving we can regularly alter the location of an advertisement on a site page which is intended to make the user less likely to overlook the placement. In addition, we are working with our sponsors and advertisers to create promotional announcements that are aesthetically inviting to our users within the design of the site, rather than obtrusive.

        We also believe that user support is critical in order to attract and retain users. We provide user support primarily through e-mail-based correspondence. Help and feedback buttons are prominently displayed throughout our network of Web sites, and our user support staff attempts to respond to all e-mail queries within two business days. In addition, community leaders provide e-mail support for broad-ranging issues. We do not charge for these services.

Sponsorship and Advertising Revenues

        Our online sponsorship arrangements are designed to support our sponsors' broad marketing objectives, including brand promotion, awareness, product introductions and online research. Sponsorship agreements typically include the delivery of impressions on our Web sites and occasionally the design and development of customized sites that enhance the promotional objectives of the sponsor. An impression is the viewing of promotional material on a Web page, which may include rich media, such as commercials originally created for a television format viewed on a Web page, and display or banner advertisements, links or other text or images. As part of a few of our sponsorship agreements, sponsors selling products may provide us with a commission on sales of their products generated through our Web sites. Advertising revenues are derived principally from short-term advertising contracts in which we typically guarantee a minimum number of impressions or pages to be delivered to users over a specified period of time for a fixed fee. Some sponsorship and advertising revenues are also derived from sponsored links, currently supplied by Google, Inc. or Google, appearing on our Web pages that are based upon relevant content or a World Wide Web search query result. These revenues are earned on a cost per thousand page views and/or a percentage of net advertising revenue earned by Google from advertisers.

        Our sponsorship and advertising revenues are derived primarily from promotional agreements, in which either full-screen arrival advertisements or display or banner advertisements are prominently displayed. A full-screen arrival advertisement appears upon entering one of our Web sites and includes a dramatic message that covers the screen and fades in up to 10 seconds leaving a smaller "arrival ad related message" embedded on the appearing Web site page. A display or banner advertisement consists of promotional content that can appear at the top or bottom of the pages on iVillage's Web sites. From each "arrival ad related message", display and banner advertisement, viewers can hyperlink directly to the sponsor's or advertiser's Web site, thus providing the sponsor or advertiser the opportunity to directly interact with an interested customer.

        We also offer research services to our sponsors, advertisers and other customers. Through third party vendors and internal staff, we provide research measuring brand awareness and the attributes related to purchase decisions. This research is primarily conducted through online campaigns where users to our Web sites are randomly invited to participate in a brief survey designed to elicit information. This research can provide our sponsors and advertisers with important demographic information, marketing information and assistance with online promotional campaigns.

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        We have a number of sponsorship and advertising arrangements with leading advertisers and sponsors across several industries which in 2004 included:

Customer Concentration

        Our five largest customers accounted for approximately 27% of total revenues for each of the years ended December 31, 2004 and 2003, and approximately 38% of total revenues for the year ended December 31, 2002. In 2004, one advertiser, Hearst, a related party, accounted for approximately 10% of our total revenues. No other single customer accounted for more than 10% of our total revenues in 2004. In 2003, Hearst accounted for approximately 11% of our total revenues. No other single customer accounted for more than 10% of our total revenues in 2003. In 2002, The Proctor and Gamble Company, or Procter and Gamble, and Hearst each accounted for approximately 11% of our total revenues, and Unilever, PLC and its affiliates, or Unilever, accounted for approximately 10% of our total revenues. No other single customer accounted for more than 10% of our total revenues in 2003. At December 31, 2004, no single customer accounted for more than 10% of our total net accounts receivable, and at December 31, 2003, Hearst accounted for approximately 20% of our net accounts receivable.

        Hearst has been one of our largest customers for each of the last three years. In July 2004, iVillage and Hearst entered into a Web site services agreement that superseded and replaced our 2001 amended and restated magazine content license and hosting agreement with Hearst. Under these agreements, we provide production, maintenance and hosting services, for which in 2004 we earned approximately $3.7 million, and advertising services, for which in 2004 we earned approximately $1.4 million. In addition, we are entitled to a commission derived from the sale of Hearst magazines, which in 2004 totaled approximately $0.7 million. As part of these agreements we also pay Hearst a royalty fee, which in 2004 totaled approximately $0.6 million. Unless earlier terminated for cause, our Web site services agreement with Hearst will expire in July 2007 and will continue on a month-to-month basis unless a party provides the other with notice of termination.

        Our largest customers have varied over time in the past, and we anticipate that they will continue to do so in the future. We do expect, however, that our results of operations in any given period will continue to depend to a significant extent on revenues from a small number of customers. For example, during 2004 Wal-Mart indicated to us that they would no longer be utilizing IVPN to create and distribute custom publications used for baby promotions in Wal-Mart's United States stores. Although Wal-Mart has never accounted for more than 10% of our total revenues on an annual basis, they have accounted for more than 10% of our total revenues on a quarterly basis. A failure to enter into contracts to replace these revenues would adversely affect IVPN's, and could adversely affect our, business, financial condition and results of operations. Consequently, the loss of even a small number of our largest customers at any one time may adversely affect our business, financial condition and results of operations, unless we are able to enter into contracts to replace lost revenue.

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Content Targeting and Search Arrangements

        In August 2003, we entered into agreements with Google to provide cost per click content and keyword targeted text advertising and World Wide Web search services to our network of Web sites. A user of our network of Web sites can use Google's proprietary mechanism to search billions of pages on the World Wide Web. Using Google's AdSense for Search service, an ensuing search results page will include targeted text link advertisements that provide an additional source of relevant information related to the user's specific search query. Through Google's AdSense for Content service, a user of our Web sites also receives contextually targeted text link advertisements that are based upon the unique content contained on each individual page of the site.

        The text link advertisements resulting from Google's AdSense services come from their network of over 100,000 advertisers. We earn revenue from clicks generated from these text link advertisements on the content and search result pages through our network of Web sites. Our agreement with Google related to AdSense for Content services expires in August 2005. Our agreement with Google related AdSense for Search services expires in August 2005, with a mutual option to renew for one additional year.

        In February 2004, we expanded our relationship with Google by entering into an agreement for additional search services using the Google Search Appliance. The Google Search Appliance allows a user of our network of Web sites to conduct an internal search that limits its results to information contained on our network of Web sites. We also use Google's AdSense for Search with the Google Search Appliance to include targeted text link advertisements with a user's internal search results page. Our agreement with Google related to the search appliance expires in February 2006.

Content Licensing Agreements

iVillage UK

        In March 2003, we entered into a license agreement with Tesco, PLC, or Tesco. Under the agreement we license our content and intellectual property, including trademarks and copyrights for use on www.iVillage.co.uk, or iVillage UK. iVillage UK serves the women's online market in the United Kingdom and the Republic of Ireland through a focused community and an array of interactive, customized online solutions and services. In exchange for the license, we receive the greater of a minimum monthly license fee or a percentage of iVillage UK's gross revenues. Our license agreement with Tesco expires in March 2023 and automatically renews unless one party provides notice to the other one year prior to the termination of the then current renewal term. Either party may terminate the agreement during the initial term of this agreement with 90 days prior notice if iVillage UK is deemed not to be a profitable entity.

MSN Network

        In September 2003, we entered into a content license arrangement with MSN network, or MSN. Under the agreement, MSN presents select iVillage content on its women's channel, MSN Women, including editorially relevant content in the categories of Beauty, Fashion & Style, Relationships, Home & Food, and Career & Money. In exchange for the content, our logo, as well as hyperlinks to additional relevant content located at iVillage.com, appears throughout the MSN Women channel and anywhere our content appears on MSN. The links contained on MSN drive additional traffic to our Web sites. We also have the opportunity to offer and promote our for-pay products and services to MSN users. In January 2005, our content license arrangement was expanded so that our editorially relevant content would also be featured on MSN's Health and Fitness Channel. The term of our agreement with MSN was also extended to December 31, 2005.

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Yahoo! Astrology

        In March 2004, we entered into a content license and distribution agreement with Yahoo! Inc, or Yahoo!. Under this agreement, we are the exclusive provider of astrological content to Yahoo!'s online astrology area. iVillage astrological content is also available in other areas of Yahoo!'s Web site. We provide Yahoo! with daily horoscopes and astrological reports. Links to additional content located on our Web sites appear throughout the Yahoo! astrology area. Yahoo! receives the greater of a fee for each registration for a gratuitous iVillage astrological chart or a revenue share for each iVillage astrological chart purchased by a Yahoo! user. Our agreement with Yahoo! expires in March 2006 and provides for our right to terminate with 30 days prior notice in the event defined content posting thresholds are not met.

Media Arrangements

        In addition to our relationship with Hearst, we will from time to time enter into agreements by which third parties will allow us to monetize their users and advertising inventory and incorporate their Web site traffic within our network of Web sites. Most Internet audience management companies include the traffic from these non-proprietary Web sites in the information they report about us.

Membership and Privacy

        We believe a large and active membership base is important to our success, and as of December 31, 2004, we had approximately 13 million members. Some features of our Web sites are restricted to members. Membership is free and available to iVillage.com users who disclose their name, e-mail address, zip code, country, age and gender and choose a member name and password to be used throughout member-only areas. Members form iVillage.com's core audience and are our most valuable users. Community challenges, message boards and chats are examples of iVillage.com members-only benefits.

        We recognize the importance of maintaining the confidentiality of member information and have a privacy policy to protect this information. Our current privacy policy is accessible through a link on each iVillage.com Web page, including the member registration page. Our current policy prohibits the sale or disclosure to any third party of any member's personal identifying information, such as his or her name or address, unless the member has provided consent in the form of an "opt-in". In limited situations that are described in our privacy policy, access to personally identifying information may be provided to a third-party partner if it is necessary for the delivery of a member service, such as a message board log-in. In these instances, the partner has agreed to be bound by our current privacy policy. In some instances, we may use information based on a member's activities on the site to offer relevant products and services on behalf of an advertiser.

        We offer our users the opportunity to purchase for-pay premium services and we plan to continue to offer these premium services as well as new for-pay services in the future.

Women.com

        On June 21, 2001, we completed our acquisition of Women.com Networks, Inc. Women.com was relaunched on iVillage.com and features content and communities in six departments including Sex & Dating, Entertainment, Style & Beauty, Celebrities, Girl Talk and Fun & Games, and also provides message boards for women who want to converse about such topics. As part of our recent site redesign, the content comprising Women.com is now found in our Beauty & Style, Love & Sex and Entertainment offerings of iVillage.com.

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gURL.com

        On August 5, 2003, we acquired the gURL.com Web site and related assets. gURL.com is a leading online community for teenage girls offering articles, advice, resources, games and interactive content, and a branded book series with topics of interest to teenage girls. gURL.com increases our demographic reach to include girls that are thirteen years of age and older and allows us to target an expanded list of advertisers as well as the additional brands of current advertisers.

Astrology.com

        On February 18, 1999, we acquired Knowledgeweb, Inc. and its primary asset, Astrology.net, which eventually became Astrology.com. Astrology.com is a content and commerce Web site providing daily horoscopes, astrology content and personalized forecasts that appeal to our core demographic of women. Astrology.com serves as a vehicle to drive repeat visits to iVillage.com through the use of daily horoscopes and accounts for a substantial portion of our traffic. We attempt to leverage the popularity of Astrology.com by using internal promotion and links to attract Astrology.com users to our other Web sites, resulting in higher average page views and time spent per visit. Astrology.com has also created an interactive commerce system that provides instantaneous, digital astrology reports and tarot card readings, which are based on input from users.

Substance.com

        On November 3, 2003, we exercised our call option to purchase Unilever's remaining ownership interest in Cooperative Beauty Ventures, L.L.C., or CBV, resulting in CBV becoming a wholly owned subsidiary of iVillage. The principal asset of CBV, Substance.com, is a Web site that offers an array of personalized online services, beauty and personal care products and interactive product recommendations. We formed CBV as a joint venture with Unilever in February 2000, with both parties agreeing to provide cash, intellectual property, marketing and other resources to the venture. The content of Substance.com has now been streamlined into our iVillage.com Beauty & Style offering.

GardenWeb.com

        On November 22, 2004, we acquired The Virtual Mirror, Inc. and its primary asset GardenWeb.com, a leading community of gardeners, offering content, web forums, community exchanges, and reference tools focused on horticulture. A former affiliate of our network of web sites, GardenWeb.com continues to augment iVillage.com's House & Home offering.

Healthology

        On January 7, 2005, we acquired Healthology, Inc., a leading producer of original, streaming video health programs and physician-authored articles. Healthology's library consists of approximately 1,200 streaming videos and approximately 2,000 articles and transcripts on health-related topics. Prior to release, all of Healthology's content is peer-reviewed by physicians affiliated and unaffiliated with Healthology. Healthology often collaborates with medical societies and other medical professional organizations in its production of content, development of sponsorships and creation of continuing medical education programs. In addition to its use on Healthology.com, Healthology's content is syndicated and appears on a distribution network of approximately 4,500 Web sites that includes prominent news media organizations, online consumer portals, health foundations and medical associations.

        Healthology's content can be condition specific or general in nature, and is targeted at consumers and healthcare professionals. Healthology's offerings for consumers help them to become better informed about healthcare choices and assist them in playing an active role in managing their health. Healthology's offerings for healthcare professionals enhance their clinical knowledge and their ability to

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communicate with patients regarding treatment options for specific health conditions. Healthology's content augments several of the key areas of iVillage.com including the Health & Well-Being, Diet & Fitness and Pregnancy & Parenting sections.

        Healthology offers clients three primary types of services: sponsorship and production, relationship management, and content licenses. Healthology charges sponsors for the creation, production and distribution of health-related content and streaming media. This content may be customized to a sponsor's specific demographic or purpose, and can also include grants where Healthology is compensated for creating educational content, but in which Healthology does not relinquish any editorial control to the sponsor. Healthology also receives service fees for assisting clients with the development of relationships through personalized health-related electronic newsletters and turn-key Web site solutions. Finally, Healthology licenses, co-brands and re-brands its content for which it receives content-license fees and shares in the revenue derived from advertising appearing proximate to the content.

iVillage Parenting Network

        IVPN is a holding company for Lamaze Publishing and IVIP which collectively provide informational and instructional magazines, television programming, videos and online properties of interest to expectant and new parents.

Lamaze Publishing

        On August 20, 1999, we acquired Lamaze Publishing, Inc, the assets of which eventually formed Lamaze Publishing. Lamaze Publishing offers Lamaze-related products and services. Lamaze is a method of childbirth preparation based on the Lamaze philosophy of birth, which states that birth is "normal, natural and healthy" and "childbirth education empowers women to make informed choices in healthcare, to assume responsibility for their health and trust their inner wisdom." Lamaze Publishing is the exclusive licensee of the LAMAZE® family of marks, owned by Lamaze International, Inc., for use in connection with consumer publications including print, audio, visual and other media. Our agreement with Lamaze Publishing grants these exclusive rights through July 2015 and we have an option to renew for an additional five years, unless either party provides the other with 12 months advance notice of termination.

        Lamaze Publishing's business strategy is to provide superior editorial products that target expectant and new parents who seek information related to pregnancy, the birth process and infant care that may not be readily available from busy healthcare professionals. Lamaze Publishing's materials are distributed through its vast network of healthcare professionals and childbirth educators as an alternative source for such information. Lamaze Publishing gratuitously provides its materials, but offsets its expenses by selling print advertising and promotional messaging to advertisers targeting the young family market. Examples of Lamaze Publishing's product offerings include:

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Lamaze Parents, a leading prenatal magazine used in childbirth education classes covering such relevant topics as prenatal nutrition, the role of the childbirth partner and the physical and emotional challenges of pregnancy, which had an annual circulation of approximately 2.7 million for 2004;



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Lamaze para Padres, a leading Hispanic pre- and post-natal magazine used and distributed by Spanish-speaking childbirth educators, which had an annual circulation of approximately 750,000 for 2004; and



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Lamaze Magazine Onserts, a sampling/promotion publication that targets expectant and new parents with coupons, samples and promotional literature that is bundled in a poly-bag with a

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magazine and distributed by Lamaze Publishing's network of healthcare professionals and childbirth educators.

        As a complement to the offline parenting media vehicles of IVPN, we have offered two Web sites that target parents on iVillage.com: ParentsPlace.com and ParentSoup.com, or Parent Soup. ParentsPlace.com is a community where new and expecting parents can connect, communicate and share in the joy of starting a family, with key features such as the Baby Name Finder, Pregnancy Calendar, First Year of Life Newsletter, Expecting Clubs, Playgroups and information from certified healthcare experts. Parent Soup is designed for parents committed to raising happy and healthy kids from toddlers to teens and includes a toddlers department, preschool department, development tracker, mothers circles, Thirty-Something Parents and information from certified healthcare experts. The content of ParentsPlace and Parent Soup can now be found in iVillage.com's Pregnancy & Parenting offering.

IVIP

        IVIP is the owner and operator of The Newborn Channel, The Newborn Channel-Spanish which is currently offered as an audio overlay to The Newborn Channel, and The Wellness Channel, all three of which we refer to as the Channels. The Newborn Channel is a 24 hours a day, 7 days a week, satellite television network offering exclusive programming to new mothers in their hospital rooms. In 2004, approximately 1,050 hospitals nationwide aired The Newborn Channel and, according to a study conducted in 2004 by Roper ASW, The Newborn Channel is viewed by greater than 80% of all mothers giving birth in these hospitals, reaching an annual circulation of approximately 2.5 million mothers. IVIP also transmits The Wellness Channel to hospitals offering general health and wellness-based programming covering topics such as patient's rights, alternative pain cures and breast cancer awareness. As of December 31, 2004, the number of hospitals airing The Wellness Channel was nominal.

        IVIP derives revenue from the sale of advertising messages and sponsorships on the Channels to third parties desiring to target pertinent markets. During 2003, IVIP began collecting a fee for receiving the Channels and, as of February 28, 2005, had converted approximately 60% of its viewing hospitals to an annual fee agreement. IVIP's for-pay initiative was undertaken in anticipation of upgrades in the technology that delivers the Channels to the hospitals and may correlate with the expiration of existing non-paying agreements with the hospitals. IVIP commenced installation of this delivery system in the hospitals in the first quarter of 2004. Once installed, the new technology will allow IVIP to customize the programming and advertising viewed at each individual hospital site and decrease operating costs due to a reduction in required satellite time.

        IVIP also owns and publishes Baby Steps magazine, a leading source of post-natal information and the only magazine endorsed by the National Association of Pediatric Nurse Practitioners, or NAPNAP, a professional organization with over 7,000 members nationwide. Baby Steps is often augmented with a promotional program that includes coupons, samples and literature of third-party advertisers that are bundled in a poly-bag with the magazine and distributed primarily to new parents at hospital bedside. Baby Steps had an annual circulation of approximately 3.0 million for the year ended December 31, 2004.

        In recent years, IVIP has also leveraged its experience of producing promotional materials to create several custom publications for sponsors of both IVPN and iVillage. In each instance, IVIP works with sponsors to create tailored magazines, catalogs or other marketing materials that range from product information and coupon compilations directed to new parents to financial services booklets focused on the needs of entrepreneurial women.

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Promotions.com

        On May 24, 2002, we completed our acquisition of Promotions.com. Promotions.com is comprised of two divisions: Promotions.com and Webstakes.com. The Promotions.com division provides custom solutions to create and manage promotions on a customer's Web site. The Promotions.com division's revenues are derived from providing services related to the creation, administration and implementation of online and offline promotions. Companies that utilized the Promotions.com division's services in 2004 include such marketers as Kraft Foods North America, Inc., Nabisco Inc., Priceline.com Incorporated and Best Buy Company, Incorporated, and such marketing agencies as The Marketing Store Worldwide and Publicis Dialog. In 2003, we outsourced most of the operations of Promotions.com to an existing service provider in order to create economies of scale.

        The Webstakes.com division provides direct marketing services for third-party promoters and advertisers via the Internet and e-mail. Beginning in 2003, Webstakes.com modified its business model in anticipation of the state commercial e-mail legislation that ultimately lead to the federal CAN-SPAM Act of 2003, or CAN-SPAM, which took effect in the United States on January 1, 2004. CAN-SPAM, and pertinent state legislation impose specific requirements in connection with the sending of commercial e-mail. Webstakes.com mailings are compliant with the requirements of CAN-SPAM and Webstakes.com requires all third parties to be CAN-SPAM compliant in accordance with the provisions of Webstakes.com's standard contract. Revenues from Webstakes.com services are primarily based upon either a "cost-per-click" or a "cost-per-action" pricing model.

Public Affairs Group

        On July 16, 2001, we acquired control of PAG, a privately held company, which is comprised of Business Women's Network, Diversity Best Practices, and Best Practices In Corporate Communications. PAG offers several fee-based benefits and services to subscribing companies and members including:

        PAG produces several books and publications through its divisions, including:

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The BWN Directory of Business and Professional Women's Organizations—lists over 5,000 organizations and Web sites;

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•

The BWN Calendar of Women's Events; Best of the Best: Corporate Awards for Diversity and Women—reviews over 45 of the best lists in America for saluting corporations for their achievements related to diversity and women;



•

Women and Diversity Enrollment Report—provides a guide to the enrollment statistics of U.S. undergraduate and graduate schools for women and minorities; and



•

Women and Diversity WOW! Facts—includes an annual compendium of salient facts, figures and statistics on and about the women's marketplace compiled from close to 10,000 research reports.

        PAG also hosts several events including an annual Diversity and Women Leadership Summit & Gala which in 2004 was attended by over 1,100 participants from 55 major corporations, 15 U.S. government agencies and 37 nations, and honored 12 senior officers of Fortune 500 companies and government agencies as advocates of diverse business cultures.

iVillage Consulting

        iVillage Consulting is our business unit that provides production and back-end provisioning services for third parties, including the creation and development of Web sites, digital commerce platforms and other aspects of their technology infrastructures. We recognize revenues from these services based upon a number of factors including actual hours worked at negotiated hourly rates, fixed fees stipulated in contracts or straight-line over the life of the contract. In 2004, iVillage Consulting provided services to Hearst, N. V. Perricone, M.D., Limited, a provider of skin care products, and Tesco.

        iVillage Consulting produces, maintains and hosts several online properties of Hearst. Pursuant to various web site services agreements, we continue to receive the online distribution rights to 23 of Hearst's online properties. Various areas within our network of Web sites link to the content of these magazine sites. We receive a revenue share for each magazine sold through our network of Web sites and various areas within our network of Web sites link to the content of certain of the magazine sites. The following table describes the magazine sites that are integrated into the iVillage network of Web sites:

        In addition to the their corporate Web site, Hearst.com, other Web sites for which we provide to Hearst production, maintenance and hosting services include: Seventeen.com, CosmoGirl.com, Teenmag.com, HarpersBazaar.com, Esquire.com and related merchandising sites.

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iVillageSolutions

        In July 2002, we announced our collaboration with Rutledge Hill Press to publish an iVillageSolutions branded book series. Our strategy in providing these books is to provide a logical offline extension of iVillage.com's content. We receive a share of the royalties from the sale of the following books:

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Best Advice on Finding Mr. Right—provides advice for the woman looking to find love or to make a relationship work;



•

Best Advice on Life After Baby Arrives—provides information, comfort and inspiration to women facing the demanding first months after a baby arrives;



•

Best Advice on Starting A Happy Marriage—provides insights and solutions for engaged and newlywed couples for making their marriage an adventure that will last;



•

6 Weeks to Losing It For Good—includes a six-week weight loss program for the common woman and an eating and exercise strategy tailored to a woman's personality and lifestyle;



•

The Frugal Woman's Guide to a Rich Life—contains guidance and anecdotes of successful secrets that avoid wasting time, money and energy;



•

Quiz Therapy—features fun, insightful self-assessments in such categories as personality, love, dating, couples, weddings, home and beauty; and



•

Heirloom Recipes—brings together the family recipes of the women of iVillage and reflects the spirit in which these recipes were originally shared.

The iVillageSolutions books can be purchased in the book departments of major online and offline outlets.

        We continue to evaluate products and services that are complementary and logical extensions of our brand to augment our iVillageSolutions offerings.

Other Operational Activities

        In 2002, we launched an iVillageSolutions-branded vitamin and nutraceutical supplement line and iVillageAccess, a dial-up Internet Service Provider offering. Each was supplied through a collaborative venture with a third party with whom we shared a portion of the profits from sales or subscriptions. The revenues related to both of these activities were not significant, and each agreement with their respective third party provider was ultimately terminated during 2004.

Long Lived Assets

        We have long lived assets which include fixed assets, goodwill, intangible assets and prepaid rent. As of December 31, 2004, our remaining net fixed assets were approximately $8.4 million, net goodwill was approximately $23.2 million and net intangible assets were approximately $8.8 million.

        In July 2003, we entered into a lease amendment with the landlord of our New York headquarters that became effective on August 15, 2003. The lease amendment provides for a reduction in leased space, as well as a reduction in rent per square foot. In connection with the lease amendment, we surrendered approximately $8.5 million classified as restricted cash to the landlord, resulting in a lease restructuring charge of approximately $4.7 million and prepaid rent of $3.7 million, which will be amortized over the remaining life of the lease which expires in 2015. Our prepaid rent, net of the current portion, is reflected as a long-lived asset in our financial statements.

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Employees

        As of December 31, 2004, we employed 216 employees, of whom 77 were in sales and marketing, 52 were in editorial and community, 35 were in administration and customer service, and 52 were in technology, operations and support. Our current employees are not represented by a labor union and are not the subject of a collective bargaining agreement. We believe that relations with our employees are satisfactory.

Sales, Marketing and Public Relations

Sales

        As of December 31, 2004, we had a direct sales organization consisting of 16 sales professionals. In addition to typical sales activities, our sales professionals regularly consult with agencies and advertisers on design and placement of Web-based advertising and provide clients with measurements and analyses of advertising effectiveness. Several of our subsidiaries also have their own dedicated sales team, including:

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Eight professionals who concentrate primarily on advertising sales and annuals fees for IVPN's Channels, video products and print advertising;



•

Eleven professionals involved in sales of the memberships, events and publications offered by PAG; and



•

Three professionals who sell Promotions.com's direct marketing services.

Marketing and Public Relations

        Our marketing professionals employ a variety of methods designed to promote our brands and to attract traffic and new members, including advertising on other Internet sites primarily through barter agreements, targeted publications, cross promotional arrangements to secure advertising and other promotional considerations. To extend the iVillage brand, we have also entered into several strategic alliances with offline partners. In addition, we leverage other audience building strategies, including working closely with search engine submissions, news group postings and cross-promotions to properly index materials.

        Our internal public relations department oversees a public relations program that assists in our marketing and brand recognition strategies. The program targets either a trade or business or a consumer audience to promote us and our brands.

        To maximize distribution of IVPN publications and the Channels, and to gain the endorsement of the professional community for these products, IVPN gives particular attention to marketing efforts targeted to childbirth educators, maternity nurses and hospitals. A staff of two marketing professionals contacts hospitals for distribution of the Channels and works with the healthcare professional community to maintain distribution levels of IVPN's publications and demonstrate how they can be used as teaching tools for expectant parents and new mothers. IVPN representatives maintain contact with the healthcare professional community through trade shows, professional conferences, consumer publication updates and personal sales calls.

Operating Infrastructure

iVillage Web Sites

        Our Web site operating infrastructure must accommodate a high volume of traffic and deliver frequently updated information and consists of approximately 100 servers. These servers run on the Sun Solaris, Linux and Microsoft Windows, NT and 2000 operating systems and use Netscape Enterprise,

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Apache and Microsoft Corporation's IIS Web server software. Our Web sites have in the past suffered outages or experienced slower response times because of hardware or software malfunctions. To date, this has not had a material effect on our business. In 2004, we consolidated and upgraded approximately 25 servers. We expect to purchase additional servers to meet our growth needs, as well as continue to consolidate older servers.

        We maintain all of our production servers at the New Jersey Data Center of SAVVIS Communications Corporation, or SAAVIS, and the California facilities of Verio, Inc., or Verio. Due to our recent acquisition of Healthology, we also currently maintain their production servers at the New York location of Globix Corporation, or Globix. Our operations are dependent upon these companies' ability to protect their respective systems against damage from fire, hurricanes, power loss, telecommunications failure, break-ins and other events. SAAVIS provides comprehensive facilities management services, including human and technical monitoring of all production servers 24 hours per day, seven days per week. The servers located at Verio are monitored by our California operations staff. Each facility is powered by multiple uninterruptible power supplies and backup generators. We cannot assure you that SAAVIS, Verio or Globix will be able to provide sufficient services to us. If necessary, we believe we will be able to engage satisfactory alternative service providers on commercially reasonable terms.

        In 2004, all of our production data, except Astrology.com, was copied to backup tapes each night and stored at a third-party, off-site storage facility. Astrology.com's production data was backed up on a daily basis at our facilities. We keep all of our production servers behind firewalls for security purposes and do not allow outside access except via secure channels. Strict password management and physical security measures are followed. Computer security vulnerability alerts are read, and, where appropriate, recommended action is taken to address any risks or susceptibilities.

        We do not presently have a comprehensive disaster recovery plan to respond to system failures. However, we provide business continuity of our information systems through the use of various technology strategies such as hardware redundancy, clustering, and load balancing. Our recovery plans provide the capability to address a failure within a specific location, however, it may not comprehensively address a failure caused by a disaster affecting an entire geographic region.

Advertisement Serving Solutions

        For several years we have used the services of DoubleClick, Inc., or DoubleClick, including DoubleClick's scalable tools for targeting, serving and analyzing online campaigns, as well as assisting in the effective monetization of advertising inventory. In particular we employ a product known as DART, which has become an online industry standard and is familiar to many of our advertisers and sponsors. Our services with DoubleClick are governed by a Master Services Agreement. In June 2004, we entered into an amendment to both our DART services attachment for publishers agreement that governs our DART services for standard media, and our DFP motif agreement that governs our DART services for rich media. Each of these agreements is now scheduled to expire in December 2007.

Audience Management System

        In August 2003, we entered into a software license and services agreement with Tacoda Systems, Inc., or Tacoda. Tacoda provides an audience management system, or AMS, that is designed to assist in the growth of advertising and transactional revenues by profiling and targeting the most valuable segments of a Web site's audiences. Tacoda's AMS collects audience data from data sources, such as ad servers, content servers, e-mail databases, e-commerce servers, applications, and data analytic programs, and merges this information with our subscription, contest and registration data to provide us with a composite view of our audience. These audience profiles can contain demographic data and audience site behavior, such as frequency of visits or the propensity to click on display

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advertisements. The analytics and business intelligence that is integrated in the AMS is designed to allow us to prioritize our monetization of our Web sites and maintain a persistent relationship with the desires of our users, as well as provide our sponsors and advertisers with more valuable data points. Our agreement with Tacoda is perpetual by function of an auto-renewal clause, and we may terminate the agreement immediately at any time and for any reason by providing notice to Tacoda.

Message Board Utilities

        In August 2004, we entered into an operation services agreement that continued our relationship with Prospero Technologies LLC, or Prospero, under which Prospero provides application software, hosting and technical support for our message boards. The Prospero system provides enhanced functionality to our message boards, making them more useful to, and consequently more likely to be frequented by, our users and members. The features of the Prospero system include the ability of a user to receive an e-mail when someone responds to a specific message board post and to search the vast number of topics posted on our message boards. We also offer premium message board utilities for an additional charge, however, revenues to date from the premium Prospero utilities have not been significant. Our agreement with Prospero expires in August 2005 and automatically renews for successive one year periods unless a party provides notice of a termination. Our agreement with Prospero may be terminated by either party for cause or at any time and for any reason by providing the proper period of notice to the other party.

The Channels

        In the past IVIP's broadcast of the Channels originated from a laser disc system, operated by Ascent Media, or Ascent, that provided a constant uplink signal to a PanAmSat satellite that is redirected to a satellite dish at each hospital and distributed to a patient's room for airing in real-time. In 2004, however, IVIP, through Ascent, began to install and convert existing hospital sites to a new technology that allows for customization of programming at each site, provides for multi-channel audio and video capabilities and eliminates the need for a constant satellite feed. The programming and advertising of each individual hospital site may now be updated on an as needed basis from Ascent's facility via a satellite signal to the existing satellite dish at each hospital site. The new technology will then receive and store the updated content for airing at a specific time or date in the future. Ascent remains responsible for the installation and service of IVIP's equipment located at each hospital and we maintain business interruption insurance in the event programming is interrupted over the designated satellite. IVIP intends to complete the conversion of all hospital sites to the new technology within the next few years. As of December 31, 2004, approximately 58% of hospital sites have signed agreements to utilize the new technology. IVIP is currently in negotiations with Ascent and has entered into an interim letter agreement, dated as of March 1, 2005, with Ascent regarding the continued provision of distribution, maintenance and installation services until a definitive services agreement mutually acceptable to the parties can be executed. The interim letter agreement is presently scheduled to expire on March 31, 2005.

Competition

        We compete for members, users, advertisers and commerce, and believe the primary competitive factors in creating and maintaining a successful Internet-based business include:

•

functionality;



•

brand recognition;



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member affinity and loyalty;



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demographic focus;

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•

variety of value-added services;



•

ease of use;



•

pricing;



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quality of products and services; and



•

reliability and critical mass.

        We also compete with other companies or Web sites which are primarily focused on targeting women online, including Lifetimetv.com and Oxygen.com, as well as Web sites targeted at the specific categories contained on our Web sites. We also anticipate competition from:

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search engine providers;



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shareware archives;



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content sites;



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other entities that may attempt to establish communities on the Internet by their own creation or purchasing one of our competitors;



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commercial online services;



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direct marketing companies; and



•

internet service providers.

        We also compete with traditional forms of media, such as newspapers, magazines, radio and television, for advertisers and advertising revenues. We believe that the principal competitive factors in attracting advertisers include:

•

the demographics of our users;



•

brand recognition;



•

the overall cost-effectiveness of the advertising medium offered by iVillage;



•

our ability to offer targeted audiences; and



•

the amount of traffic on our Web sites.

        Many of our current and potential competitors, including developers of Web directories and search engines and traditional media companies, have:

•

longer operating histories;



•

significantly greater financial, technical and marketing resources;



•

greater name recognition; and



•

larger existing customer bases.

        These competitors are able to undertake more extensive marketing campaigns for their brands and services, adopt more aggressive advertising and subscription pricing policies and make more attractive offers to potential employees, distribution partners, commerce companies, advertisers and third-party content providers. Internet content providers and Internet service providers, including developers of search engines, sites that offer professional editorial content and commercial online services, may not be perceived by advertisers as having more desirable Web sites for placement of advertisements.

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        Several of our current advertisers, sponsors and strategic partners also have established collaborative relationships with our competitors or potential competitors, and other high-traffic Web sites. Accordingly:

•

we may be unable to grow our membership, traffic levels and advertiser customer base at historical levels;



•

we may be unable to retain our current members, traffic levels or advertiser customers;



•

we may be unable to attract a significant number of paying customers for our products and services;



•

competitor's growth in traffic from these relationships could make their Web sites more attractive to advertisers; and



•

our strategic partners may sever or elect not to renew their agreements with us.

        Several major publishing companies produce products that are directly competitive with IVPN's magazines. Time Inc., G&J USA Publishing, and Meredith Corporation all publish various pre- and post-natal publications. Disney Publishing and Children's Television Workshop also publish general parenting magazines. All of these publishers have substantially greater marketing, research and financial resources than IVPN. IVPN competes by emphasizing the highly targeted nature of its audience, product quality and the fact that its publications are used as teaching tools by professionals, as well as the credibility and trust parents place in the LAMAZE® brand name.

        While Lamaze Publishing's instructional videos and IVIP's The Newborn Channel currently have no direct competitors, advertisers in this marketplace are heavy users of daytime network television and cable television networks targeted to young parents. The broadcasting companies that provide these opportunities have invested substantial amounts in programming, sales and marketing and are much better known to advertisers than IVPN, Lamaze Publishing and IVIP. To compete, Lamaze Publishing and IVIP must convince advertisers that advertising recall and effectiveness obtained in an educational or hospital setting is superior to that of traditional broadcasting.

        The Wellness Channel currently contends with a few direct competitors, such as General Electric Company's the "Patient Channel," in addition to the competition experienced by the other channels. Although few in number, such direct competitors possess significant financial resources, have well-established brand names, and large existing customer bases when compared with IVIP. To compete, IVIP must up-sell the current subscribers to, and advertisers on, its other Channels and continue to offer superior programming to differentiate itself from its competitors.

        Healthology competes with both online and offline providers of healthcare information for user traffic and sponsorships from pharmaceutical, biotech, medical device and consumer products companies. Offline suppliers of healthcare information include network and cable television, print journals, conferences, continuing medical education programs and symposia. In addition, Healthology competes online with thousands of healthcare-related Web sites, including WebMD Corporation. In addition, there are many companies that provide non-Internet based marketing and advertising services to the healthcare industry. These competitors include advertising agencies, consulting firms, marketing and communications companies and contract sales and marketing organizations. Some of these entities have well-established brand names, large existing customer bases and extensive marketing budgets. To compete, Healthology must convince users and sponsors that information provided by Healthology is superior to these alternative sources and utilize such content on iVillage.com to increase visibility, use and brand recognition.

        Our iVillageSolutions products compete with similar product and service offerings many of which are from companies with greater brand recognition and resources. In order to compete, we must attract

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the customers of competitors by differentiating these products and leveraging our brand name and internal advertising capabilities.

        We may not be able to compete successfully against our current or future competitors and competitive pressures that we face could have a material adverse effect on our business, financial condition and results of operations.

Intellectual Property, Proprietary Rights and Domain Names

        We regard our copyrights, service marks, trademarks, trade names, trade dress, trade secrets, proprietary technology and similar intellectual property as critical to our success. We rely on trademark and copyright law, trade secret protections of the countries in which we conduct business and confidentiality and/or license agreements with our employees, customers, independent contractors, affiliates and others to protect our proprietary rights.

        We have licensed in the past, and expect that we may license in the future, certain of our proprietary rights to third parties. Although we attempt to ensure that these licensees maintain the quality of our brand, the steps we have taken to protect our proprietary rights may not be adequate and third parties may infringe or misappropriate our proprietary rights. In addition, other parties may assert claims of infringement of intellectual property against, or challenge our proprietary rights.

        As of December 31, 2004, we owned approximately 180 domestic and foreign trademark registrations or applications for registration related to our business.

Available Information

        We were incorporated in the state of Delaware on June 8, 1995. The Internet address of our corporate Web site is www.ivillage.com. We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports available free of charge through the "investor info" section of this Web site. We also make available financial information, news releases and other information on this Web site. Our reports filed with, or furnished to, the Securities and Exchange Commission, or SEC, are also available at the SEC's web site at www.sec.gov or at the Public Reference Room of the SEC at 450 Fifth Street, NW, Washington, DC 20549. Information about the Public Reference Room is available at 1-800-SEC-0330.

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Executive Officers

        The following table sets forth our executive officers, their ages and the positions held by them with us as of March 14, 2005.

        Douglas W. McCormick, age 55, has been a director of iVillage since February 1999 and Chairman of the Board since April 2001. From April 2000 through July 2000, he served as our President and has been our Chief Executive Officer since July 2000. From 1998 to April 2000, Mr. McCormick was President of McCormick Media, a media consulting firm. From 1993 to 1998, Mr. McCormick was President and Chief Executive Officer of Lifetime Television Network, a joint venture of The Hearst Corporation and The Walt Disney Company. Mr. McCormick held various other positions at Lifetime from 1984 to 1993 in the sales, marketing and research areas. Mr. McCormick also serves on the boards of directors of MarketWatch.com. Inc. and Waterfront Media Inc. (formerly known as Agora Media Inc.) and the compensation committee of both companies. Mr. McCormick received an M.B.A. from the Columbia University School of Business and a B.A. from the University of Dayton.

        Steven A. Elkes, age 43, has been our Chief Financial Officer since June 2004 and continues to be our Executive Vice President, Operations and Business Affairs, a position he has held since July 2000, and Secretary, a position he has held since October 1999. From April 1999 to July 2000, Mr. Elkes was our Senior Vice President, Business Affairs. From August 1996 to April 1999, Mr. Elkes held various management positions with us, including Vice President, Business Affairs. From August 1993 to August 1996, Mr. Elkes was Vice President Credit/Structured Finance at CNA Insurance Company. From August 1991 to August 1993, Mr. Elkes served as Assistant Vice President at CNA Insurance Company. Mr. Elkes received an M.B.A. from Baruch College and a B.A. from Grinnell College.

        Jane Tollinger, age 62, has been our Executive Vice President, Operations and Strategy since August 2003. From September 2000 to August 2003, Ms. Tollinger was our Senior Vice President, Operations & Business Affairs. From June 2000 to September 2000, Ms. Tollinger served as our Vice President, Business Affairs. From June 1999 to June 2000, Ms. Tollinger served on several advisory boards. From September 1993 through June 1999, Ms. Tollinger served as Executive Vice President of Lifetime Television Network. Prior to September 1993, Ms. Tollinger held various management positions at Lifetime Television Network. Prior to joining Lifetime Television Network, Ms. Tollinger was an attorney with Columbia Pictures and an associate with the Coudert Brothers law firm. Ms. Tollinger received a J.D. from Columbia Law School, an M.A. from Harvard University and a B.A. from Beloit College.

        Richard J. Kolberg, age 33, has been our Senior Vice President, Chief Accounting Officer and Controller since June 2004. From September 2003 until June 2004, Mr. Kolberg was our Vice President, Chief Accounting Officer and Controller. From September 2000 until September 2003, Mr. Kolberg was our Vice President and Controller. From August 1999 to September 2000, Mr. Kolberg was our Director and Assistant Controller. From October 1996 to August 1999 was

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employed by Goldstein Golub Kessler LLP as an Audit Manager. Mr. Kolberg is a Certified Public Accountant and received his B.S. from State University of New York, Albany.

        Richard Caccappolo, age 39, has been our Senior Vice President, iVillage Consulting since November 2001. From September 2000 until November 2001, Mr. Caccappolo was our Chief Technology Officer and Senior Vice President of Product Development. From March 1999 to September 2000, Mr. Caccappolo served as our Chief Technology Officer. From January 1998 to March 1999, Mr. Caccappolo served as the Chief Information Officer of Kodak Polychrome Graphics, a supplier of products and services to graphics arts industries. From October 1994 to December 1997, Mr. Caccappolo served as Sun Chemicals' Director, Information Systems—Europe. Mr. Caccappolo received his M.B.A. from New York University, Leonard N. Stern School of Business and his B.S. from Cornell University.

        Kellie Gould, age 35, has been our Senior Vice President and Editor-in-Chief since July 2003. From October 2001 to July 2003, Ms. Gould was our Senior Vice President, Programming. Ms. Gould has also held the following positions with us: Vice President, Programming from August 1999 to October 2001, Editorial Director from October 1998 to August 1999, Managing Editor—Parent Soup from December 1997 to October 1998, and Associate Producer—Parent Soup from December 1996 to December 1997. Prior to joining us, Ms. Gould was a Features Associate at Vogue Magazine and a reporter for AdWeek Magazines. Ms. Gould received a B.A. from the University of Wisconsin-Madison.

        Peter R. Naylor, age 39, has been our Senior Vice President, Sales since January 2004. From January 2003 to December 2003, Mr. Naylor was the our Vice President & General Manager, Sales. From April 2002 until December 2002, Mr. Naylor was our Vice President, Sales. Prior to joining us in April 2002, he served as Vice President of Sales, Eastern Region/National Agency Relations, for Terra Lycos, an Internet portal. From 1996 to 1999, he served as Eastern Sales Director for Wired Digital Interactive, an online commercial publisher. Mr. Naylor has also held advertising sales positions with Vanity Fair and Spin magazines. Mr. Naylor is a member of the Board of Directors of the Interactive Advertising Bureau, an association dedicated to helping online, interactive broadcasting, e-mail, wireless and Interactive television media companies increase their revenues, 212, Inc., a networking forum for ad agencies and publishers located in the New York City area, and Goodwill of New York City. Mr. Naylor received a B.A. from Denison University.

        Barry S. Kresch, age 51, has been our Senior Vice President, Research since June 2003. From August 2002 to June 2003, Mr. Kresch was our Vice President, Research. Prior to August 2002, Mr. Kresch was a consultant to us, as well to other media companies. From September 1993 to June 1999, Mr. Kresch was the Senior Vice President of Research and Marketing Services for Lifetime Television. From September 1984 to September 1993, Mr. Kresch held other management positions at Lifetime. Prior to joining Lifetime Mr. Kresch was a Research Manager for Nielsen Media Research. Mr. Kresch received an M.B.A. from Fairleigh Dickinson University and a B.A. from Dickinson College.

        Steven Haimowitz, age 41, has been our President—Healthology, Inc. since January 2005. Prior to our acquisition of Healthology, Inc., Dr. Haimowitz was the President, Chief Executive Officer and Co-Founder of Healthology, Inc. since July 1998. Dr. Haimowitz received his M.D. from the Downstate Medical Center of the State University of New York and his B.A. from Brooklyn College of the City University of New York.

Item 2.    Properties.

        We are headquartered in New York, New York, and currently lease approximately 42,000 square feet at 500-512 Seventh Avenue. This lease, as amended, runs through April 2015.

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        We also lease sales offices located in Chicago, Illinois, Santa Monica, California and San Francisco, California. These leases are on a month-to-month basis.

        Healthology leases approximately 9,200 square feet of space in New York, New York. This lease expires on March 31, 2005.

        IVPN subleases approximately 7,000 square feet of space at 9 Old Kings Highway, Darien, Connecticut. This sublease expires on June 30, 2005.

        Astrology.com leases approximately 7,400 square feet of space in San Francisco, California. This lease expires on November 30, 2005.

        PAG leases approximately 6,800 square feet of space in Washington, D.C. This lease expires on December 4, 2006.

Item 3.    Legal Proceedings.

        In the normal course of business, iVillage is subject to proceedings, lawsuits and other claims. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Consequently, the ultimate aggregate amount of monetary liability or financial impact with respect to these matters at December 31, 2004, cannot be ascertained. While these matters could affect our operating results for any one quarter when resolved in future periods and while there can be no assurance with respect thereto, management believes, with the advice of outside legal counsel, that after final disposition any monetary liability or financial impact to iVillage from these matters would not be material to iVillage's results of operations and financial condition.

        Several plaintiffs have filed class action lawsuits in federal court against iVillage, several of its present and former executives and its underwriters in connection with its March 1999 initial public offering. A similar class action lawsuit was filed against Women.com, several of its former executives and its underwriters in connection with Women.com's October 1999 initial public offering. The complaints generally assert claims under the Securities Act, the Exchange Act and rules and regulations of the SEC. The complaints seek class action certification, unspecified damages in an amount to be determined at trial, and costs associated with the litigation, including attorneys' fees.

        In February 2003, the defendants' motion to dismiss certain of the plaintiffs' claims was granted in part, but, for the most part, denied. In June 2003, a proposed settlement of this litigation was structured between the plaintiffs, the issuer defendants, the issuer officers and directors named as defendants, and the issuers' insurance companies. The proposed settlement generally provides that the issuer defendants and related individual defendants will be released from the litigation without any liability other than certain expenses incurred to date in connection with the litigation, the issuer defendants' insurers will guarantee $1.0 billion in recoveries by plaintiff class members, the issuer defendants will assign certain claims against the underwriter defendants to the plaintiff class members, and the issuer defendants will have the opportunity to recover certain litigation-related expenses if the plaintiffs recover more than $5.0 billion from the underwriter defendants. The respective boards of directors of iVillage and Women.com each approved the proposed settlement in July 2003.

        On June 25, 2004, the plaintiffs filed a motion for preliminary approval of the settlement with the court, which was accompanied by a brief filed by the issuer defendants in support of the plaintiffs' motion. The court requested that any objections to preliminary approval of the settlement be submitted by July 14, 2004, and certain underwriter defendants formally objected to the settlement. The plaintiffs and issuer defendants separately filed replies to the underwriter defendants' objections to the settlement on August 4, 2004. On February 15, 2005, the court issued an opinion and order granting preliminary approval to the settlement and ordering the plaintiffs and issuer defendants to submit to the court a revised settlement stipulation consistent with the court's order. The court has scheduled a conference for March 18, 2005 to discuss the status of the stipulation, to make final determinations as

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to the form and substance of plaintiff's' required notice to its class-members and to schedule a fairness hearing to allow for any plaintiff to object to the settlement. There has been no further ruling on this matter and there can be no assurance that the proposed settlement will be approved and implemented in its current form, or at all.

        In June 2001, Euregio.net commenced an action in Belgium against Women.com claiming damages in excess of one million Euros in connection with certain alleged copyright infringements. Despite Women.com's arguments challenging the jurisdiction of the Belgian court, the alleged infringements and the amount of damages, in January 2003 a Belgian court issued a judgment against Women.com in the amount of approximately 850,000 Euros. Women.com appealed the judgment in the Belgian court system, and on September 15, 2004, a judgment in the appeal awarded Euregio.net 251,000 Euros.

        On October 27, 2004, Women.com and Euregio.net entered into a settlement agreement pursuant to which Women.com paid Euregio.net 150,000 Euros, or approximately $0.2 million (based on the Euro exchange rate as of October 27, 2004 (the "Euro Exchange Rate"), of which $0.1 million was charged to operations and is included in general and administrative in the condensed consolidated statements of operations, with the remainder charged against a previously established reserve. Women.com is also required to pay the amount of any income tax obligation of Euregio.net and its founder related to the settlement in an amount up to 7,500 Euros, or approximately $9,500 based on the Euro Exchange Rate. In addition, Women.com is required to purchase an advertising campaign from EasyScopes Entertainment Network, a compilation of Web sites affiliated with Euregio.net, for 101,000 Euros, or approximately $0.1 million based on the Euro Exchange Rate, which would run for 15 consecutive months commencing in January 2005. Women.com has paid the 101,000 Euros and it is being held in a joint escrow account. During the advertising campaign, Euregio.net has guaranteed a certain amount of traffic will be directed to the Women.com Web site, and in the event that such traffic is not delivered, Euregio.net will deliver additional advertising impressions until such time as the guarantee is met. Pursuant to the terms of the settlement agreement, both parties have waived their respective right to appeal the judgment of the Belgium court, the settlement fully and finally satisfies all of Euregio.net's rights under such judgment, and the litigation is concluded.

        We are not currently subject to any other material legal proceedings.

Item 4.    Submission of Matters to a Vote of Security Holders.

        Our 2004 annual meeting of stockholders was held on November 1, 2004, to elect four Class III directors to the board of directors and to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ended December 31, 2004.

        In the election of directors, the four director nominees were elected with the following votes:

        Directors whose terms of office continued after the meeting are Cathleen P. Black, Kenneth A. Bronfin, John T. (Jack) Healy, Edward D. Horowitz, Lennert J. Leader and Douglas W. McCormick.

        The stockholders voted in favor of the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ended December 31, 2004, as follows:

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PART II

Item 5.    Market for Registrant's Common Equity and Issuer Purchases of Equity Securities Related Stockholder Matters

Market Information

        During the fiscal year ended December 31, 2004, our common stock traded on the The Nasdaq National Market. During the fiscal year ended December 31, 2003, our common stock traded on both The Nasdaq National Market and The Nasdaq SmallCap Market. Our common stock was traded on The Nasdaq National Market prior to its transfer to The Nasdaq SmallCap Market on December 20, 2002, and was subsequently transferred back to The Nasdaq National Market on August 19, 2003. On both The Nasdaq National Market and The Nasdaq SmallCap Market, our common stock has traded under the symbol "IVIL". The following table sets forth, for the periods indicated, the high and low sale/bid prices per share of our common stock as reported on The Nasdaq National Market or The Nasdaq SmallCap Market, as applicable:

(1)

As reported on The Nasdaq SmallCap Market.

(2)

As reported on The Nasdaq SmallCap Market from July 1, 2003 to August 18, 2003 and The Nasdaq National Market from August 19, 2003 through September 30, 2003.

(3)

As reported on the Nasdaq National Market.

Holders

        As of March 15, 2005 and there were 767 holders of record of our outstanding common stock. This figure does not include the number of stockholders whose shares are held of record by a broker or clearing agency, but does include each such brokerage house or clearing agency as a single holder of record.

Dividends

        We have never declared or paid any cash dividends on our capital stock. We presently intend to retain future earnings, if any, to finance the expansion of our business and do not expect to pay any cash dividends in the foreseeable future.

Recent Sales of Unregistered Securities

        On January 7, 2005, in connection with our acquisition of Healthology, Inc., we issued an aggregate of 205,908 shares of common stock to two former stockholders of Healthology, Inc. In consideration of this issuance, we received shares of Healthology, Inc. common stock which we valued at approximately $1.2 million in the aggregate. We relied on an exemption from registration pursuant to Rule 506 under Regulation D promulgated under the Securities Act.

        During February 2004, an aggregate of 29,449 shares of common stock were issued to certain of our existing security holders in exchange for warrants they had acquired in connection with a securities

25

purchase agreement related to our acquisition of Women.com. In each case, we relied on the exemption provided by Section 3(a)(9) of the Securities Act.

        On January 14, 2004, Hearst Communications, Inc. exercised a warrant it received in connection with a securities purchase agreement related to our acquisition of Women.com and purchased 2,065,695 shares of common stock for $0.01 per share. We relied on the exemption from registration provided by Section 4(2) of the Securities Act for the sale of the securities issued in connection with the exercise of this warrant.

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Item 6.    Selected Financial Data.

        Our selected consolidated financial data should be read in conjunction with "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and notes to those statements and other financial information included elsewhere in this report. The consolidated statements of operations data for the years ended December 31, 2004, 2003 and 2002 and the consolidated balance sheet data as of December 31, 2004 and 2003 are derived from our audited consolidated financial statements included in this report. The consolidated balance sheet data as of December 31, 2002, 2001 and 2000 and the consolidated statements of operations data for the years ended December 31, 2001 and 2000 are derived from our audited consolidated financial statements that are not included in this report. The historical annual results presented here are not necessarily indicative of future results. We acquired an additional 30.1% interest in Cooperative Beauty Ventures, L.L.C. in March 2001 increasing our ownership to 80.1%, with the remaining 19.9% interest acquired in October 2003, Women.com Networks, Inc. in June 2001, a controlling interest in Public Affairs Group, Inc. in July 2001, an 82.3% interest in Promotions.com, Inc. in April 2002 with the remaining 17.7% interest acquired in May 2002 and The Virtual Mirror, Inc in November 2004. The financial data reflect the results of operations of these subsidiaries since their dates of acquisition. In June 2000, we decided to discontinue the operations of our IVN, Inc. subsidiary, formerly known as iBaby, Inc. As such, all discussion and analysis below does not include IVN, Inc. operations.

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(1)

Please see Note 3, Note 4, Note 5 and Note 12 of our Notes to Consolidated Financial Statements, included elsewhere in this report.

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

        The following discussion should be read in conjunction with our consolidated financial statements and notes to those statements and the other financial information appearing elsewhere in this report. As explained in the beginning of Part I of this report, in addition to historical information, the following discussion contains forward-looking information that involves risks and uncertainties.

Overview

        The following management's discussion and analysis is intended to provide information necessary to understand our consolidated financial statements and highlight certain other information which, in the opinion of our management, will enhance a reader's understanding of our financial condition, changes in financial condition and results of operations. It is organized as follows:

•

The section entitled "iVillage Background," briefly describes the organization of our business by subsidiary or division.



•

"Critical Accounting Policies" discusses each of our most critical accounting policies, including revenue recognition, fixed assets and intangibles, Web site development costs, goodwill, income taxes, allowance for doubtful accounts, and management estimates and assumptions.



•

"Results of Operations" discusses the primary factors that are likely to contribute to significant variability of our results of operations from period to period and then provides detailed narrative regarding significant changes in our results of operations for 2004 compared to 2003, and 2003 compared to 2002.

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•

"Liquidity and Capital Resources" discusses our 2004 year-end liquidity, cash flows for the year ended December 31, 2004 compared to those for the year ended December 31, 2003, factors that may influence our future cash requirements and the status of certain contractual obligations as of December 31, 2004.



•

"Recent Accounting Pronouncements" discusses the significance of various recent accounting pronouncements to our financial reporting.



•

"Legal Proceedings" discusses the status of litigation relating to our initial public offering as well as that of Women.com.

iVillage Background

        Founded in 1995, iVillage is "the Internet for women" and consists of several online and offline media-based properties, including iVillage.com, iVillage Consulting, GardenWeb.com, Promotions.com, Astrology.com, IVPN and PAG. Following is a synopsis of certain of our operational activities, subsidiaries and divisions:

        The discussion and analysis below indicates the results of operations of Promotions.com since April 19, 2002, and GardenWeb.com since November 22, 2004.

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Critical Accounting Policies

Revenue Recognition

iVillage.com

        The discussion and analysis below related to iVillage.com also includes information related to our Promotions.com, Substance.com, Women.com and GardenWeb.com subsidiaries and gURL.com, iVillage Consulting and iVillageSolutions divisions.

        Our revenues are derived primarily from the sale of sponsorship and advertising contracts. Sponsorship revenues are derived principally from contracts designed to support a customer's broad marketing objectives, including brand promotion, awareness, product introductions and online research. Sponsorship agreements typically include the delivery of impressions on our Web sites and occasionally the design and development of customized sites that enhance the promotional objectives of the sponsor. An impression is the viewing of promotional material on a Web page, which may include rich media and display or banner advertisements, links, or other text or images. As part of a few sponsorship agreements, sponsors selling products may provide us with a commission on sales of their products generated through our Web sites. To date, amounts received from the sale of sponsor's products have not been significant.

        Advertising revenues are derived principally from short-term advertising contracts in which we typically guarantee a minimum number of impressions or pages to be delivered to users over a specified period of time for a fixed fee or based on actual impressions delivered. Sponsorship and advertising revenues for fixed fee contracts that are both time and impression based are recognized ratably in the period in which the advertisement is displayed, provided that we have no continuing obligations and the collection of the receivable is reasonably assured, at the lesser of the ratio of impressions delivered over total guaranteed impressions or the straight-line basis over the period of service. To the extent that minimum guaranteed impressions are not met, we defer recognition of the corresponding revenues until the guaranteed impressions are achieved. Sponsorship and advertising revenues in which the customer specifies the timing of the delivery of impressions and payment is due upon delivery of impressions are recognized when the impressions are delivered and the collection of the receivable is reasonably assured. In certain instances the customer reports impression delivery to us. These impression reports are compared to our internal traffic reports for accuracy.

        We also derive sponsorship and advertising revenues from sponsored links appearing on an iVillage Web page that is based upon relevant content or a World Wide Web search query result. These revenues are earned on a cost per thousand impressions and/or a percentage of the advertiser's net revenue and are recognized upon notification from the search engine provider.

        For contracts with multiple elements, namely those that include delivered and undelivered products, or advertising and production revenue, we allocate revenue to each element based on evidence of its fair value under the Financial Accounting Standards Board, or FASB, Emerging Issues Task Force, or EITF, Issue No. 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables," or EITF 00-21. Evidence of fair value is the price of a deliverable when it is regularly sold on a stand-alone basis. We recognize revenue allocated to each element when the criteria for revenue set forth above are met.

        Barter revenues generally represent exchanges by us of advertising space on our Web sites for reciprocal advertising space on or traffic from other Web sites. Revenues and expenses from these barter transactions are recorded based upon the fair value of the advertisements delivered in accordance with EITF No. 99-17, "Accounting for Advertising Barter Transactions". Fair value of advertisements delivered is based upon our recent practice of receiving cash for similar advertisements. Barter revenues are recognized when the advertisements are displayed on iVillage.com and its affiliated properties. Barter expenses are generally recognized when our advertisements are displayed on the

30

reciprocal Web sites or properties, generally in the same period as when advertisements are displayed on iVillage.com and its affiliated properties. Barter expenses are included as part of sales and marketing expenses.

        We recognize revenues from iVillage Consulting's services based upon a number of factors, including actual hours worked at negotiated hourly rates, completed contract or straight-line over the life of the contract.

        We have received revenues from initiatives involving subscription-based properties, the sale of iVillage-branded products and services, the sale of third-party products, the licensing of portions of our content and services, and the sale of research. Revenues from GardenWeb.com are included as part of subscription-based properties. We recognize revenues from these initiatives when products are shipped and/or provided to the customer, or straight-line over the life of the agreement and when the collection of the receivable is reasonably assured and no further obligation remains.

Promotions.com, Inc.

        Promotions.com, Inc. generates revenues through Promotions.com, an online and offline full service promotions services group and Webstakes.com, a division dedicated to Internet sweepstakes and promotions.

        Promotions.com revenues are derived principally from contracts in which Promotions.com typically provides custom services for the creation, administration and implementation of a promotion on a customer's Web site. Promotions.com's revenue recognition policy related to its services is to recognize revenues as deliverables are met and/or ratably over the period of the promotion, provided that no significant obligations remain and collection of the resulting receivable is reasonably assured.

        Webstakes.com revenues are derived primarily from service contracts whereby Webstakes.com recognizes revenues based on either a "cost-per-click" or a "cost-per-action" pricing model. Webstakes.com recognizes revenue related to its cost-per-click pricing model when a user has been delivered to the customer's Web site, the customer has reported such activity to us, and the collection of the corresponding receivable is reasonably assured. Revenue is recognized differently in a cost-per-action pricing model, which requires Webstakes.com to not only deliver the aforementioned user to a customer's Web site, but also a specific user action such as purchasing a product or registering for more information as a member of the customer's Web site in order for Webstakes.com to earn revenue. Webstakes.com recognizes revenue related to the cost-per-action pricing model when the specific action has been performed on its customer's Web site, the customer has reported such activity to us, and the collection of the corresponding receivable is reasonably assured.

Astrology.com

        Revenues from Astrology.com consist of the sale of astrological charts and other related products to users of our astrology-related Web sites. We recognize revenues from astrological product sales, net of any discounts, when products are delivered to customers, the collection of the receivable is reasonably assured and no further obligations remain. In addition, Astrology.com earns revenues through the licensing of its content and revenue share agreements. We recognize revenues from these products when the collection of the receivable is reasonably assured or as cash is received, and no further obligations remain.

IVPN

        IVPN's revenues have been derived primarily from advertising placements in IVPN's publications, videos and Web site, and broadcasts of The Newborn Channel and The Newborn Channel-Spanish (currently offered as an audio overlay to The Newborn Channel). In addition, sponsorship and

31

advertising revenues are generated through a sampling and coupon program, which offers advertisers the ability to distribute samples, coupons and promotional literature to new and expectant parents. Sponsorship and advertising revenues are recognized on a straight-line basis over the period of service, provided that IVPN has no continuing obligations and the collection of the receivable is reasonably assured.

        IVPN also creates and distributes custom publications and mailings. Revenues from the sale of custom publications and mailings are recognized when IVPN completes its creative responsibilities and receives the appropriate approvals from the customer and/or through the distribution of the custom publications, provided that evidence of fair value is obtained at a minimum on the undelivered deliverable, and the other requirements of EITF 00-21 are fulfilled, provided the collection of the receivable is reasonably assured.

        IVPN charges an annual fee paid by hospitals for their receipt of broadcasts of The Newborn Channel. Contracts related to this fee typically range from three to five years in length. IVPN recognizes revenues from these fees ratably over the term of the agreement provided the collection of the receivable is reasonably assured.

PAG

        Revenues from PAG are generated primarily through subscription-based programs conveying current best practices for both diversity issues in the workplace and corporate communications, the hosting of events, including an annual two-day summit and gala focusing on diversity and women, and consulting agreements. PAG recognizes revenue from subscriptions ratably over the term of the subscription agreement, from events when the events are held, and from consulting agreements ratably over the term of the agreement or upon completion of a deliverable, provided the collection of the receivable is reasonably assured.

Fixed Assets and Intangibles

        Depreciation of equipment, furniture and fixtures and computer software is provided for by the straight-line method over their estimated useful lives ranging from one to five years. Amortization of leasehold improvements is provided for over the lesser of the term of the related lease or the estimated useful life of the improvement. The cost of additions, and expenditures which extend the useful lives of existing assets, are capitalized, and repairs and maintenance costs are charged to operations as incurred. Amortization of intangible assets are over the expected life of the related asset and range from one to ten years. Effective January 1, 2002, we adopted Statement of Financial Accounting Standard, or SFAS, No.144, "Accounting for the Impairment or Disposal of Long-Lived Assets" or SFAS 144, regarding the recognition and measurement of the impairment of long-lived assets to be held and used.

        We assess the recoverability of our fixed assets and intangible assets by determining whether the unamortized balance over the assets remaining life can be recovered through undiscounted forecasted cash flows. If undiscounted forecasted cash flows indicate that the unamortized amounts will not be recovered, an adjustment will be made to reduce the net amounts to an amount consistent with forecasted future cash flows discounted at a rate commensurate with the risk associated when estimating future discounted cash flows. Future cash flows are based on trends of historical performance and our estimate of future performances, giving consideration to existing and anticipated competitive and economic conditions.

Web Site Development Costs

        iVillage accounts for Web site development costs in accordance with the provisions of EITF Issue No. 00-2, "Accounting for Web Site Development Costs", or EITF 00-2, which requires that certain

32

costs to develop Web sites be capitalized or expensed, depending on the nature of the costs. Amortization of Web site development costs is provided for by the straight-line method over the estimated useful life of two years.

Goodwill

        SFAS No. 141, "Business Combinations" requires all business combinations to be accounted for using the purchase method of accounting and that certain intangible assets acquired in a business combination shall be recognized as assets apart from goodwill. 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 the reporting unit with its carrying amount. If the carrying amount of the reporting unit exceeds its fair value then an analysis will be performed to compare the implied fair value of goodwill with the carrying amount of goodwill. An impairment loss will be recognized in an amount equal to the difference. Fair value is typically based upon future cash flows discounted at a rate commensurate with the risk involved or market based comparables. After an impairment loss is recognized, the adjusted carrying amount of goodwill is its new accounting basis.

Income Taxes

        We recognize deferred taxes by the asset and liability method of accounting for income taxes in accordance with the provisions of SFAS No.109, "Accounting for Income Taxes". Deferred income taxes are recognized for differences between the financial statement and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income or reversal of deferred tax liabilities during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

        The difference between our U.S. federal statutory rate of 34%, as well as our state and local rate, net of our federal benefit of 7%, when compared to our actual effective tax rate of 0%, is principally attributed to a partial reversal of the valuation allowance related to our deferred tax assets. We have a full valuation allowance on our net deferred tax assets. If we continue to generate pre tax income in future periods, a partial or full reversal of the valuation allowance against the deferred tax assets may be required, and such reversal may be material in the period in which the reversal is recorded. The decision to reverse the valuation allowance will, among other things, consider our profitability in recent periods, as well as our future profitability and available tax planning strategies.

Allowance for Doubtful Accounts

        We assess the required amount of allowance for doubtful accounts based on past experience, the review of the agings and analysis of specific customer accounts.

Management Estimates and Assumptions

        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

33

period. Actual results could differ from these estimates. Significant estimates and assumptions made by us include those related to fair values utilized to allocate revenue under EITF 00-21, 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.

Results of Operations

        In accordance with SFAS No.131, "Disclosures About Segments of an Enterprise and Related Information," or SFAS 131, segment information is being reported consistent with our method of internal reporting. In accordance with SFAS 131, operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. We are organized primarily by subsidiaries and divisions. Our subsidiaries and divisions have no operating managers that report to the chief operating decision maker. The chief operating decision maker reviews information at a consolidated results of operations level, although the chief operating decision maker does review revenue results of subsidiaries and divisions. As a result, our discussion of revenue has been organized into separate subsidiaries and divisions, however, operating expenses and results of operations are discussed on a combined basis.

        We believe the following factors may contribute to the variability of our results of operations from period to period:

•

the timing of our recognition of revenue;



•

the volatility of the online advertising market;



•

the timing of our sponsored events and symposiums;



•

the loss of a contract from a major customer;



•

an interruption or malfunction in service from our primary third party service providers;



•

the date of commencement of a sponsorship and advertising campaign; and



•

the date of completion, and receipt of customer approval for the creative and/or distribution services of a custom publication, which is based upon a customer's advertising and marketing initiatives.

Revenues

        Beginning in the quarterly report for the three months ended March 31, 2004, we reclassified Promotions.com revenues to add revenues from Promotions.com and Webstakes.com under iVillage.com. Consequently, the following discussion of our revenues may not correspond to similar discussions in prior annual reports. The following table sets forth revenues by property (dollars in thousands):

(1)

Percent of total revenues.

(2)

Included in iVillage.com revenues are iVillage.com, Promotions.com, Substance.com, Women.com and GardenWeb.com properties and gURL.com, iVillage Consulting and iVillageSolutions divisions.

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iVillage.com

(1)

Percent of iVillage.com's revenues.

        Revenues from iVillage.com accounted for approximately 60% of total revenues in 2004, 57% of total revenues in 2003 and 67% of total revenues in 2002. Revenues from iVillage.com increased approximately $9.1 million, or 29%, for the year ended December 31, 2004, as compared to the year ended December 31, 2003, primarily due to an increase in sponsorship and advertising revenues, which includes revenues from sponsored links, of approximately $5.3 million, an increase in iVillage Consulting revenues of approximately $1.8 million, and an increase in Promotions.com revenues of approximately $1.1 million. The increase in sponsorship and advertising revenues was primarily due to an increase in the number of contracts and advertisers, coupled with higher pricing in 2004, as compared to 2003, generating incremental revenues of approximately $4.7 million. Revenues from sponsored links contributed approximately $0.9 million in revenues for the year ended December 31, 2004, as compared to approximately $0.3 million in 2003. The increase in iVillage Consulting revenues of approximately 55% for the year ended December 31, 2004, as compared to 2003, was primarily due to the three-year renewal of a Web Site services agreement signed in July 2004 with Hearst to provide hosting and production services related to several of Hearst magazine Web sites. The renewal provides for an increase in fees and lower royalty payments. In addition, iVillage Consulting fees increased due to a two-year Web Site services agreement signed in December 2003 with Hearst for providing production, maintenance and hosting services for three teen Web Sites.

        Revenues from iVillage.com decreased approximately $8.5 million, or 21%, for the year ended December 31, 2003, as compared to the year ended December 31, 2002. The decline in revenues for the year ended December 31, 2003, as compared to 2002, was primarily due to a decrease in year over year sponsorship and advertising revenues of approximately $7.4 million and online services/other of approximately $1.6 million. The primary driver behind the decrease in sponsorship and advertising revenues was the expiration of the Unilever and Procter & Gamble long-term contracts, which provided approximately $9.7 million of additional revenues in 2002 from these customers as compared to 2003, offset by additional advertisers. The decrease in online services/other resulted from the expiration of a licensing agreement in the first quarter of 2002 of approximately $0.5 million and the sale of research in 2002 of approximately $1.1 million, with no identifiable amounts in 2003.

        Revenues from Promotions.com, Inc. increased $1.1 million, or 31%, for the year ended December 31, 2004, as compared to the corresponding period in 2003, primarily due to a larger number of promotional campaigns created and managed by the Promotions.com division in 2004, as compared to the corresponding period in 2003, generating incremental revenues of approximately $1.6 million. The increase in revenues is offset by lower revenues of approximately $0.5 million for the year ended December 31, 2004, as compared to the corresponding period in 2003, from the Webstakes.com division due to the modification of its business model during 2003, in anticipation of the federal CAN-SPAM Act of 2003, as well as a deteriorating environment for e-mail direct marketers. Revenues from Promotions.com, Inc. increased approximately $1.0 million, or 41%, for the year ended

35

December 31, 2003 as compared to 2002, primarily due to the benefit of revenues recognized for the full year of 2003 as compared to revenues being recognized for a partial year in 2002. Promotions.com, Inc. was acquired in April 2002.

Astrology.com

(1)

Percent of Astrology.com's revenues.

        Revenues from Astrology.com accounted for approximately 5% of total revenues for both the years ended December 31, 2004 and 2003, and 6% of total revenues for the year ended December 31, 2002. Revenues from Astrology.com increased approximately $0.5 million, or 18%, for the year ended December 31, 2004, as compared to the corresponding period in 2003, due to an increase in revenues from online services of approximately $0.2 million and other revenues of approximately $0.3 million. The increase in online services was primarily due to an increase in astrological charts sold and from other revenues primarily due to an increase in revenue share payments received from third parties.

        Revenues from Astrology.com decreased approximately $0.4 million, or 13%, for the year ended December 31, 2003 as compared to 2002, primarily due to a decrease in revenues of online services of approximately $0.2 million and a decrease in other revenues, including custom content revenues, of approximately $0.2 million.

IVPN

(1)

Percent of IVPN's revenues.

        Revenues from IVPN accounted for approximately 28% of total revenues in 2004, 30% of total revenues in 2003 and 21% of total revenues in 2002. IVPN's revenues increased by approximately $2.1 million, or 12%, for the year ended December 31, 2004, as compared to 2003 primarily due to an increase in revenue from custom publications of approximately $2.0 million and an increase in revenue from hospital licensing fees of approximately $1.2 million, offset by a decrease in sponsorship and advertising revenues of approximately $0.9 million. Custom publications revenue increased approximately 50% year over year due to an increase in the number of publications created and distributed in 2004 as compared to 2003. There were five publications created and distributed in 2004 as compared to three publications in 2003. Licensing fees increased approximately $1.2 million, or 397%, for the year ended December 31, 2004, as compared to the corresponding period in 2003, primarily due to the commencement of a larger number of agreements in which hospitals pay an

36

annual fee for The Newborn Channel. As of December 31, 2004, 610 hospitals have agreed to pay a fee for The Newborn Channel, as compared to 386 hospitals for the corresponding period in 2003. The decrease in sponsorship and advertising revenues of approximately 7% for the year ended December 31, 2004, as compared to the corresponding period in 2003, was primarily due to a decrease in advertising placements in IVPN's publications and video, and a lower number of customers advertising on The Newborn Channel in 2004.

        Total revenues of IVPN for the year ended December 31, 2003 increased approximately $4.0 million, or 32%, as compared to 2002, primarily due to an increase in revenues from the sale of custom publications of approximately $2.4 million and sponsorship and advertising of approximately $1.2 million. The increase in custom publications revenues was due to an increase in the size of the publications and increased copies distributed. Additionally, IVPN began to charge an annual fee to hospitals for The Newborn Channel in 2003. Revenue generated from these fees was approximately $0.3 million for the year ended December 31, 2003.

        In 2004, Wal-Mart Stores, Inc. and its affiliates, or Wal-Mart, indicated to us that they would no longer be utilizing IVPN to create and distribute custom publications which were used for baby promotions in Wal-Mart's United States stores. These publications accounted for approximately $4.8 million, or 26%, of IVPN's total revenues for the year ended December 31, 2004, approximately $3.9 million, or 23%, for the year ended December 31, 2003 and approximately $1.1 million, or 9%, for the year ended December 31, 2002. A failure to enter into contracts to replace these revenues would adversely affect IVPN's business, financial condition and results of operations.

PAG

(1)

Percent of PAG's revenues.

(2)

The aggregate of this column does not equal 100% due to rounding.

        Revenues from PAG accounted for approximately 7% of total revenues in 2004, 8% of total revenues in 2003 and 6% of total revenues in 2002. PAG's revenues remained relatively unchanged year over year for the years ended December 31, 2004 and 2003. The decrease in revenues from events of approximately $0.2 million, or 9%, was primarily due to lower revenues earned on an annual event in October 2004, which we believe was caused by the then impending election.

        Revenues from PAG for the year ended December 31, 2003 increased approximately $0.7 million, or 20%, as compared to the year ended December 31, 2002 primarily due to an increase in consulting and other revenues resulting from a consulting agreement signed in 2003, with no comparable agreement in 2002, of approximately $0.2 million, in addition to an increase of approximately $0.4 million, from various annual events held by PAG, due to increased sponsorship dollars and higher attendance.

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Customer Concentration

        Our five largest customers accounted for approximately 27% of total revenues for each of the years ended December 31, 2004 and 2003 and approximately 38% of total revenues for the year ended December 31, 2002. In 2004, one advertiser, Hearst, a related party, accounted for approximately 10% of our total revenues. No other single customer accounted for more than 10% of our total revenues in 2004. In 2003, Hearst accounted for approximately 11% of our total revenues. No other single customer accounted for more than 10% of our total revenues in 2003. In 2002, Procter and Gamble and Hearst each accounted for approximately 11% of our total revenues, and Unilever accounted for approximately 10% of our total revenues. No other single customer accounted for more than 10% of our total revenues in 2002. At December 31, 2004, no single customer accounted for more than 10% of our total net accounts receivable, and at December 31, 2003, Hearst accounted for approximately 20% of our net accounts receivable.

        Our largest customers have varied over time in the past, and we anticipate that they will continue to do so in the future. We do expect, however, that our results of operations in any given period will continue to depend to a significant extent on revenues from a small number of customers. For example, during 2004 Wal-Mart indicated to us that they would no longer be utilizing IVPN to create and distribute custom publications used for baby promotions in Wal-Mart's United States stores. Although Wal-Mart has never accounted for more than 10% of our total revenues on an annual basis, they have accounted for more than 10% of our total revenues on a quarterly basis. A failure to enter into contracts to replace these revenues would adversely affect IVPN's, and could adversely affect our, business, financial condition and results of operations. Consequently, the loss of even a small number of our largest customers at any one time may adversely affect our business, financial condition and results of operations, unless we are able to enter into contracts to replace lost revenue.

Operating Expenses

        The following table sets forth our operating expenses by type (dollars in thousands):

(1)

Percent of total revenues.

Operating Expense Reductions

        Total operating expenses for the year ended December 31, 2004, as compared to the corresponding period in 2003, have declined primarily as a result of cost reductions, reduced depreciation and amortization and non-cash charges incurred in 2003 but not in 2004.

        In February 2003, we announced an expense reduction initiative with the goal of reducing annualized costs by up to $10.0 million. During 2003, we recognized and/or achieved approximately

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$8.5 million of these savings, primarily through the renegotiation of our New York real estate lease and contracts with third-party vendors, as well as staff reductions.

        We have achieved cost reductions in the past through increased managerial efficiencies and several expense reduction initiatives targeted at certain expenses, including reduced advertising, reduced lease commitments, targeted staff reductions and reduced employee benefit plan costs.

Editorial, Product Development and Technology

        Editorial, product development and technology expenses consist primarily of the following:

•

Payroll, severance and related expenses for the editorial, technology, Web site design and production staffs;



•

the cost of communications;



•

related expenditures necessary to support iVillage's Web sites, software development, technology and support operations;



•

costs associated with IVPN's magazines, custom publications, onsert program, which bundles samples and promotional literature in a poly-bag with a magazine, and the broadcasting of its programs; and



•

an allocation of facility expenses, which is based on the number of personnel in editorial, product development and technology roles.

Years Ended December 31, 2004 and 2003

        Editorial, product development and technology expenses for the year ended December 31, 2004 were approximately $28.9 million, or 43% of total revenues. Editorial, product development and technology expenses were approximately $28.8 million, or 52% of total revenues, for the corresponding period in 2003. The increase in such expenses for 2004 compared to 2003 was primarily attributable to an increase in consultant expenses of approximately $1.6 million primarily from an increase in the number of promotional campaigns created and managed by our Promotions.com division, as well as increased costs of approximately $0.8 million associated with two additional custom publications created and distributed in 2004 as compared with 2003. These amounts were primarily offset by a decrease in payroll, severance and related expenses of approximately $0.9 million, a decrease in licensing fees of approximately $0.3 million, and a decrease in facility costs resulting in a decreased facilities allocation of approximately $1.0 million. The decrease in payroll, severance and related expenses was primarily due to the capitalization of salaries associated with the redesign of our Web site in accordance with EITF 00-2 of approximately $0.7 million. Licensing fees decreased due to the renegotiation of a vendor contract in the second quarter of 2004 which had substantial changes in the terms and conditions from the original contract, and provided a one-time benefit of approximately $0.3 million, as well as reduces future obligations. Facility costs decreased in 2004, as compared to 2003, primarily due to a lease amendment and a lower bonus accrual. In the third quarter of 2003, we entered into a lease amendment with the landlord of our New York leased space whereby we received a reduction in leased space as well as a reduction in our rent per square foot. As a result, total costs for the New York leased facility for the year ended December 31, 2004 decreased approximately $0.7 million, as compared to the year ended December 31, 2003. We allocate our bonus accrual to our various departments through the facilities reallocation. At December 31, 2004, no bonus accrual was established, which compares to a bonus accrual of $0.9 million at December 31, 2003. Editorial, product development and technology expenses decreased as a percentage of total revenues for the year ended December 31, 2004, when compared to the same period in 2003, primarily as a result of the increase in total revenues.

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Years Ended December 31, 2003 and 2002

        Editorial, product development and technology expenses were approximately $28.0 million, or 47% of total revenues, for the year ended December 31, 2002. The increase in editorial, product development and technology expenses for the year ended December 31, 2003, as compared to 2002, was primarily attributable to increased revenues from IVPN. Associated with these revenues were higher costs involved with larger custom publications created in 2003, as compared to the custom publications created in 2002, by IVPN on behalf of an advertiser of approximately $1.2 million and increased circulation and production costs associated with IVPN's magazines, videos and promotional programs of approximately $0.7 million. Additionally, the acquisition of Promotions.com resulted in incremental expenses of approximately $0.7 million. These amounts were partially offset by a decrease in salaries, severance and related expenses of approximately $1.9 million. Editorial, product development and technology expenses increased as a percentage of total revenues for the year ended December 31, 2003, when compared to the same period in 2002, primarily as a result of the increase in expenses from the higher revenue, but lower margin, custom publication sales, coupled with an overall decline in total revenues.

Sales and Marketing

        Sales and marketing expenses consist primarily of the following:

•

Payroll, commissions, severance and related expenses for sales and marketing personnel;



•

advertising and marketing-related expenses;



•

an allocation of facility expenses, which is based on the number of personnel in sales and marketing roles; and



•

distribution agreements which expired in 2002.

Years Ended December 31, 2004 and 2003

        Sales and marketing expenses for the year ended December 31, 2004 were approximately $19.0 million, or 28% of total revenues. Sales and marketing expenses were approximately $20.0 million, or 36% of total revenues, for 2003. The decrease for 2004 compared to 2003 of approximately $0.9 million, or 5%, was primarily attributable to a decrease in market research costs of approximately $0.4 million, a decrease in public relations costs of approximately $0.2 million, as well as lower facility costs, resulting in a decreased facilities allocation of approximately $0.6 million. Market research costs decreased for the year ended December 31, 2004, as compared to the corresponding period in 2003, primarily due to a research study conducted by a third party vendor in 2003, with no comparable research study performed in 2004. These amounts were primarily offset by an increase in media and advertising expenses of approximately $0.3 million due to an increase in our usage of barter advertising as a means of marketing our business. Sales and marketing expenses decreased as a percentage of total revenues for the year ended December 31, 2004, as compared to the same period in 2003, due to a decrease in sales and marketing expenses as a result of our overall effort to manage costs, coupled with an increase in revenues.

Years Ended December 31, 2003 and 2002

        Sales and marketing expenses were approximately $30.2 million, or 51% of total revenues, for the year ended December 31, 2002. The decrease in sales and marketing expenses for the year ended December 31, 2003, as compared to 2002, was primarily attributable to the following:

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2003 Events

•

a decrease in online media expenses of approximately $0.4 million;



•

a decrease in Hearst print expenses of approximately $2.5 million which ended in 2003; and



•

a decrease in salaries, commissions, severance and related expenses of approximately $1.0 million;

2002 Event

•

our negotiated termination of an advertising agreement with the National Broadcasting Company, Inc., or NBC, that required us to purchase television advertising of approximately $1.3 million, and pay a termination fee of approximately $4.1 million in the first quarter of 2002.

These decreases were partially offset by incremental sales and marketing expense during 2003 related to the Promotions.com, Inc. acquisition of approximately $0.4 million. Sales and marketing expenses decreased as a percentage of total revenues for the year ended December 31, 2003, as compared to the same period in 2002, due to a larger percentage decrease in sales and marketing expenses, as a result of our overall effort to manage costs, as compared to the decline in revenues.

        Included in sales and marketing expenses are barter transactions, which amounted to approximately 23% of total sales and marketing costs in 2004, 21% in 2003, and 11% in 2002. Barter transactions increased year over year as a percentage of sales and marketing expenses primarily due to the decrease in sales and marketing expenses, coupled with an increase in barter expense.

General and Administrative

        General and administrative expenses consist primarily of the following:

•

Payroll, severance and related expenses for executive management, finance, human resources and in-house legal counsel;



•

directors' and officers' insurance;



•

general corporate overhead;



•

professional fees; and



•

an allocation of facility expenses, which is based on the number of personnel in general and administrative roles.

Years Ended December 31, 2004 and 2003

        General and administrative expenses for the year ended December 31, 2004 were approximately $11.2 million, or 17% of total revenues. General and administrative expenses were approximately $13.3 million, or 24% of total revenues, for 2003. The decrease between 2004 compared to 2003 of approximately $2.1 million, or 16%, was primarily attributable to a decrease in payroll, severance and related expenses of approximately $1.9 million, decreased bad debt expenses of approximately $0.3 million, decreased insurance costs of approximately $0.5 million, as well as lower facility costs, resulting in a decrease in facilities allocation of approximately $0.4 million. These amounts were primarily offset by an increase in professional fees of approximately $1.1 million for the year ended December 31, 2004, as compared to the corresponding period in 2003. Payroll, severance and related expenses decreased for the year ended December 31, 2004, as compared to the corresponding period in 2003, primarily due to the departure of some management personnel in the third quarter of 2003 that were not replaced. Professional fees increased approximately 80% to $2.5 million from $1.4 million in 2004 primarily due to costs of compliance with the Sarbanes-Oxley Act of 2002 and the settlement of

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the Euregio.net litigation. General and administrative expenses decreased as a percentage of total revenues for the year ended December 31, 2004, when compared to the corresponding period in 2003, primarily as a result of a decrease in payroll, severance and related expenses, coupled with an increase in revenues.

Years Ended December 31, 2003 and 2002

        General and administrative expenses for the year ended December 31, 2002 were approximately $13.5 million, or 23% of total revenues. The decrease in general and administrative expenses for the year ended December 31, 2003, as compared to 2002, was primarily due to lower bad debt expense of approximately $0.3 million in 2003, and the reserve for stockholder notes receivable of approximately $0.4 million in 2002, offset by an increase in severance and related expenses of approximately $0.9 million. General and administrative expenses were relatively consistent year over year, however these expenses increased as a percentage of total revenues for the year ended December 31, 2003, when compared to the comparable period in 2002, primarily due to the decline in revenues in 2003 compared to 2002.

        In the ordinary course of business, we utilize estimates to determine the accrual of certain operating expenses. These estimates are reviewed on an ongoing basis to determine the adequacy of these accruals. For the year ended December 31, 2004, we reversed approximately $0.4 million of previous years' accruals included in operating expenses, primarily due to the renegotiation of a vendor contract in the second quarter of 2004 which had substantial changes in the terms and conditions from the original contract and provided for a one-time benefit of approximately $0.3 million. In addition, in 2004, we established and reversed approximately $0.5 million of accruals due to changes in estimates. For the corresponding period in 2003, we reversed, in total, approximately $0.7 million and for 2002, we reversed, in total, approximately $1.5 million, of accruals included in operating expenses due to changes in estimates on services previously provided for. These amounts were offset by additional accruals for various operating expenses.

Lease Restructuring Charge and Impairment of Fixed Assets

        In the second quarter of 2003, we abandoned a significant portion of our New York leased real estate. As a result, we incurred a lease restructuring charge of approximately $0.6 million. In addition, we wrote off fixed assets of approximately $5.2 million that were impaired with the abandonment of the leased space and reduced the liability for deferred rent associated with the abandoned leased space by approximately $1.8 million.

        In July 2003, we entered into a lease amendment with the landlord of our New York headquarters that became effective on August 15, 2003. The lease amendment provided for a reduction in leased space, as well as a reduction in rent per square foot. In connection with the lease amendment, we surrendered the approximately $8.5 million classified as restricted cash to the landlord, resulting in a lease restructuring charge of approximately $4.7 million and prepaid rent of approximately $3.7 million, which will be amortized over the remaining life of the lease. In addition, we expensed fixed assets of approximately $1.5 million that were transferred to the landlord, reduced the liability for deferred rent associated with the reduction of leased space by approximately $0.6 million and reversed the remaining lease restructuring liability of approximately $0.6 million.

        There are no comparable amounts for the years ended December 31, 2004 and 2002.

Depreciation and Amortization

        Depreciation and amortization expenses for the year ended December 31, 2004 were approximately $6.0 million, or 9% of total revenues. For 2003, depreciation and amortization expenses were approximately $8.6 million, or 16% of total revenues. The decrease in depreciation and amortization

42

for 2004 compared to 2003 was primarily due to the impairment of intangible assets and fixed assets in the second and third quarters of 2003 associated with the restructuring of our headquarters' lease, the restructuring of the business operations of the Promotions.com division, and changing the Webstakes.com business model, each of which reduced the cost basis on which depreciation and amortization is calculated. In addition, depreciation and amortization expenses decreased in 2004 as a result of certain assets being fully depreciated or amortized in 2003, as well as the intangible assets acquired in the Women.com acquisition being fully amortized in June 2004.

        Depreciation and amortization expenses for the year ended December 31, 2002 were approximately $11.9 million, or 20% of total revenues. The decrease in depreciation and amortization expenses for 2003 as compared to 2002 was primarily due to several intangible assets being fully amortized in 2002 and the impairment of intangible assets and fixed assets in the second and third quarter of 2003, reducing the cost basis on which depreciation and amortization was calculated, partially offset by amortization expense on intangible assets acquired with the Promotions.com acquisition in April 2002.

Impairment of Goodwill, Intangible Assets and Fixed Assets

        No impairment of goodwill, intangible assets and fixed assets was recorded for the year ended December 31, 2004. Impairment of goodwill, intangible assets and fixed assets for the year ended December 31, 2003 was approximately $4.0 million, or 7%, of total revenues. For 2002, impairment of goodwill, intangible assets and fixed assets was approximately $1.0 million, or 2%, of total revenues. The $4.0 million impairment recorded for the year ended December 31, 2003 was attributable to the restructuring of the business operations of the Promotions.com business unit and changing the Webstakes.com business model in the second quarter of 2003. The $1.0 million impairment recorded for the year ended December 31, 2002 resulted from the annual impairment test performed in accordance with SFAS 142. Upon completion of this test, the fair value of a reporting unit did not exceed the reporting unit's carrying amount and an impairment was recorded in the fourth quarter of 2002.

Interest Income, Net

        Interest income, net primarily includes interest income from iVillage's cash balances and interest earned on stockholders' notes receivable. Interest income, net was approximately $0.6 million, or 1% of total revenues, for the year ended December 31, 2004, approximately $0.2 million, or less than 1% of total revenues, for the year ended December 31, 2003, and approximately $0.5 million, or 1% of total revenues, for the year ended December 31, 2002. Interest income increased for 2004 as compared to 2003 primarily due to higher average net cash and cash equivalent balances stemming from our public offering completed in July 2004. Interest income, net decreased from 2002 to 2003 primarily due to the repayment of the NBC loan in the first quarter of 2002 and lower cash and cash equivalents balances in 2003.

Other Income (Expense), Net

        Other income, net was approximately $0.2 million, or less than 1% of total revenues for the year ended December 31, 2004, and approximately $0.7 million, or 1% of total revenues for the year ended December 31, 2003. For the year ended December 31, 2002, other expense was approximately $34,000, or less than 1% of total revenues. In 2004, other income, net primarily includes moneys received from a legal settlement, distribution in a bankruptcy claim acquired in the acquisition of Promotions.com and from a reversal of a previously established purchase accrual relating to a bankruptcy claim acquired in the acquisition of Women.com. In 2003, other income, net primarily includes a negotiated settlement concerning disputed amounts between us and the owners of a prior business acquisition of $0.5 million.

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Gain on Sale of Joint Venture Interest and Other Assets

        Gain on sale of joint venture interest and other assets was approximately $0.4 million for the year ended December 31, 2004, and approximately $0.6 million for the year ended December 31, 2003. Both amounts represent approximately 1% of total revenues. There was no amount for the year ended December 31, 2002. Gain on sale of joint venture interest resulted from the restructuring of our Tesco relationship in March 2003, under which a division of Tesco purchased our entire ownership interest in iVillage UK. The gain on sale also related to amounts we received pursuant to the license agreement entered into with the Tesco division contemporaneously with such restructuring.

Income Tax Expense

        Income tax expense was approximately $0.3 million, or less than 1% of total revenues, for the year ended December 31, 2004. There were no comparable amounts for the years ended December 31, 2003 and 2002. Income tax expense relates to state taxes owed by a subsidiary stemming from ownership of equipment in many different states. The subsidiary files these returns on a stand alone basis, and as such can not utilize our consolidated net operating loss carryforwards.

        iVillage has undergone several ownership changes as defined by Section 382 of the Internal Revenue Code. As of December 31, 2004, we have net operating loss carryforwards for federal income tax purposes of approximately $306.3 million, of which approximately $7.8 million are subject to an annual limitation of approximately $0.6 million, approximately $237.9 million are subject to an annual limitation of $1.3 million and approximately $60.6 million have no annual limitation. The net operating loss carryforwards begin to expire in 2010. Future changes in our ownership may result in annual limitations on the amount of carryforwards which we can realize in future periods. The net deferred tax asset has been fully reserved due to the uncertainty of our ability to realize this asset in the future. To the extent that deferred tax assets created as a result of our acquisitions reverse in future periods, the benefit of the reversal will be recorded as goodwill. In addition, to the extent that deferred tax assets, created as a result of excess stock compensation deduction, reverse in future periods, the benefit of this reversal will be recorded as additional paid in capital.

        The difference between our U.S. federal statutory rate of 34%, as well as our state and local rate, net of our federal benefit of 7%, when compared to our actual effective tax rate of 0%, is principally attributed to a partial reversal of the valuation allowance related to our deferred tax assets. We have a full valuation allowance on our net deferred tax assets. If we continue to generate pre tax income in future periods, a partial or full reversal of the valuation allowance against the deferred tax assets may be required, and such reversal may be material in the period in which the reversal is recorded. The decision to reverse the valuation allowance will, among other things, consider our profitability in recent periods, as well as our future profitability and available tax planning strategies.

Discontinued operations

        During 2004, approximately $0.1 million was reversed from a previously established reserve, due to a change in estimate, and is included in the consolidated statements of operations as a gain on discontinued operations.

Net Income(Loss)

        We recorded net income of approximately $2.7 million, or $0.04 per share, for the year ended December 31, 2004, and a net loss of approximately $27.1 million, or $0.49 per share, for the year ended December 31, 2003, and recorded a net loss of approximately $33.9 million, or $0.62 per share,

44

for the year ended December 31,2002. We achieved net income for the year ended December 31, 2004, compared to a net loss in 2003, primarily due to the following:

•

In 2004:



•

higher revenues of approximately $11.7 million; and



•

lower operating expenses, excluding the 2003 events listed below, of approximately $5.6 million.



•

In 2003:



•

lease restructuring charges and related impairment of fixed assets associated with our New York office leased space of approximately $9.1 million; and



•

the restructuring of our Promotions.com business resulting in an impairment of goodwill, intangible assets and fixed assets of approximately $4.0 million.

        The decrease in net loss for the year ended December 31, 2003, compared to the same period in 2002 was primarily due to the following:

•

In 2002:



•

the adoption of SFAS 142 which resulted in a change in accounting principle charge of approximately $9.2 million; and



•

our negotiated termination of an advertising agreement with NBC that required us to purchase television advertising of approximately $1.3 million, and pay a termination fee of approximately $4.1 million in the first quarter of 2002.



•

In 2003:



•

lower online media and Hearst print expense of approximately $2.9 million; and



•

lower depreciation and amortization of approximately $3.3 million.

        The decrease in net loss for 2003 was offset by the following:

•

lower revenues of approximately $4.2 million;



•

lease restructuring charges and related impairment of fixed assets due to the abandonment renegotiation of leased real estate of approximately $9.1 million; and



•

the restructuring of the Promotions.com business resulting in a larger impairment of goodwill, intangible assets and fixed assets of approximately $3.0 million.

Recent Events

        On January 7, 2005, iVillage acquired all of the outstanding equity of Healthology, Inc., a privately held company and a leading producer and distributor of physician-generated video- and article-based health and medical information on the Internet. The aggregate purchase price, inclusive of transaction related expenses, was approximately $17.5 million consisting of approximately $15.7 million in cash and 205,908 shares of iVillage's common stock.

Liquidity and Capital Resources

        As of December 31, 2004, we had approximately $83.0 million in cash and cash equivalents. Cash equivalents include money market accounts. We maintain our cash and cash equivalents in highly rated financial institutions and at times these balances exceed insurable amounts.

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        Net cash provided by operating activities improved by approximately $9.9 million to $4.4 million for the year ended December 31, 2004, from net cash used of approximately $5.5 million for the year ended 2003. The overall increase in net cash provided by operating activities for the year ended December 31, 2004 compared to the comparable period in 2003 was primarily from:

•

an improvement in the results of operations, as adjusted by non-cash items, of approximately $18.0 million; and



•

the utilization of a prepaid amount of approximately $0.2 million in 2004, as compared to a cash outlay of approximately $3.7 million in 2003, which is associated with the restricted cash surrendered to the landlord in consideration of our lease renegotiation,

offset by:

•

an increase in restricted cash and other assets of approximately $0.1 million in 2004 compared to a utilization of approximately $10.6 million in 2003, which was primarily due to the surrender of cash to the landlord in consideration of our New York office space lease renegotiation; and



•

a lower amount of deferred revenue recognized in 2004 of approximately $1.1 million, primarily from the completion of our October 2003 Unilever agreement.

        Net cash used in investing activities increased to approximately $4.3 million for the year ended December 31, 2004, from approximately $0.9 million for the year ended 2003. The overall increase in net cash used in investing activities for 2004 compared to 2003 was primarily due to an increase in the purchase of fixed assets of approximately $2.3 million, consisting mostly of hospital video equipment and capitalized Web site development costs, and the acquisition of The Virtual Mirror, Inc. in November 2004 of approximately $0.9 million.

        Net cash provided by financing activities totaled approximately $67.2 million for the year ended December 31, 2004, compared to approximately $0.9 million for the year ended December 31, 2003. The overall increase in cash provided by financing activities for 2004 compared to 2003 was primarily attributable to proceeds from the securities offering completed in July 2004 of approximately $69.4 million, net of offering costs of approximately $4.7 million, and an increase in proceeds from the exercise of stock options and warrants of approximately $1.5 million.

        Except for 2004, we have historically incurred net losses and negative cash flows on an annual basis. However, management believes that iVillage's current funds will be sufficient to enable iVillage to meet its planned expenditures through the next twelve months.

        Factors that could affect our business, financial condition and results of operations include the loss of any of our major customers or a significant downturn in the advertising market or economy, in general. Additional factors that could have an adverse affect are described below under "Risks" as well as elsewhere in this "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations."

        IVPN currently broadcasts television programming to hospitals via a 24-hour, 7 days a week satellite broadcast. Upon the expiration of the contract or in the event of an unforeseen earlier interruption of service, we would need to either negotiate a new contract, find another satellite provider and/or invest in alternative technology to distribute the service. IVPN is in the process of converting many of its hospitals from the satellite broadcast to a new system that eliminates the need for a constant satellite feed. This new technology will only require a limited amount of satellite time each month resulting in reduced operating costs in 2005. IVPN estimates that it will cost approximately $3.0 million to $4.0 million to convert to the new technology, of which approximately $1.5 million has been incurred. In 2003, IVPN initiated the collection of an annual fee from hospitals to receive programming broadcast by IVPN. These fees result from agreements between IVPN and the hospitals that generally have a length of three to five years. As of December 31, 2004, approximately 58% of

46

participating hospitals have agreed to pay this fee, however, we can make no assurance that all of the hospitals will agree to pay a fee. The total value of signed contracts at December 31, 2004 is in excess of $7.7 million, which will be recognized as revenue over the next several years.

        Our February 2000 advertising agreement with Unilever, as amended, provided for a Unilever advertising purchase commitment of $14.5 million. This agreement expired in June 2003. In October 2003, we entered into a new agreement with Unilever that terminated the February 2000 advertising agreement and provide for Unilever's purchase of an additional $0.1 million in advertising and receipt of the remaining advertising not received under the previous agreement of approximately $0.9 million. The new agreement expired in December 2004 and no amount remains to be earned.

        Pursuant to the amended and restated magazine content license and hosting agreement with Hearst, Hearst committed to purchase from us between approximately $16.4 million and $18.2 million of production and advertising services over a three-year period ending in June 2004. This agreement also provided for revenue sharing between Hearst and us with respect to advertising revenues obtained by us from the Hearst magazine Web sites and our other Web sites containing substantial Hearst content. This revenue-sharing arrangement required that we pay Hearst a royalty payment, based on net advertising revenues, of at least approximately $2.6 million during the three-year term of the agreement. This amount would be reduced on a pro rata basis if Hearst failed to expend its stated annual minimum in production fees in any year of the agreement. In addition, if a shortfall in production fees occurred in any year of the agreement, Hearst would be required to place additional advertising in an amount equal to 40% of the production fee shortfall.

        In July 2004, we entered into a three-year Web site services agreement with Hearst that supersedes and replaces the amended and restated magazine content license and hosting agreement we assumed as part of our acquisition of Women.com. Pursuant to the Web site services agreement:

•

Hearst will pay to us a production and service fee of $4.0 million during the first year of the renewed agreement which would increase by approximately $0.2 million in each subsequent year;



•

We will continue to receive a commission on magazine subscription sales and if magazine subscription sales do not reach a certain threshold in the second year of the new agreement, then we will not be entitled to any commission from magazine subscriptions sales in the third year of the new agreement;



•

We will no longer be required to offer Hearst, and Hearst would no longer be obligated to purchase, advertising on iVillage.com; and



•

Hearst will continue to receive a commission from us on a percentage of the advertising sales from the Hearst magazine Web sites we host, the commissions paid to and received from Hearst will vary based on performance.

        Revenues from this agreement are recognized on a straight line basis over the life of the contract. Consequently, our work efforts, which include a significant amount of production services performed during the first year of this agreement, do not coincide with the timing of our revenue recognition on this agreement.

        As of December 31, 2004, we have received $2.0 million and earned approximately $2.1 million in connection with this agreement.

        In December 2003, we signed a Web site services agreement in which Hearst will pay approximately $1.8 million for production, maintenance and hosting services for three teen Web sites: Seventeen.com, CosmoGirl.com and Teen.com. The agreement terminates in December 2005. As of December 31, 2004, we have received approximately $0.8 million and earned approximately $0.9 million in connection with this agreement.

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        In March 2003, we restructured the terms of our joint venture so that a division of Tesco purchased our entire ownership interest in iVillage UK. We also entered into a twenty-year agreement with that division, subject to earlier termination upon the occurrence of certain events, whereby we will license to iVillage UK certain of our content and intellectual property, including trademarks and copyrights, for use in the United Kingdom and Ireland in exchange for the greater of a minimum monthly license fee or a percentage of iVillage UK's gross revenues.

        In November 2004, we acquired all of the outstanding stock of The Virtual Mirror, Inc., whose primary asset is GardenWeb.com, a leading community of gardeners, offering content, web forums, community exchanges, and reference tools focused on horticulture. The purchase price was approximately $0.9 million.

        We lease office space and equipment under non-cancelable operating leases expiring at various dates through April 2015. In addition, in the ordinary course of business we enter into agreements with various service providers for ad serving, satellite transmissions and license/content arrangements. The following is a schedule of future minimum non-cancelable contractual obligations and the affect such obligations are expected to have on our liquidity and cash flows in future periods as of December 31, 2004 (in thousands):

        Capital expenditures were approximately $3.6 million for the year ended December 31, 2004 and were primarily for hospital video equipment, computer hardware and software purchases as well as the capitalization of certain Web site development costs. Our capital requirements depend on numerous factors, including:

•

market acceptance of our services;



•

the amount of resources we devote to investments in our business, including entering into joint ventures with and/or the acquisition of other entities;



•

the resources we devote to marketing;



•

the resources we devote to building the infrastructure necessary to enable us to sell subscription-based products and services; and



•

the resources we devote to selling our products and services.

Off-Balance Sheet Arrangements

        In the ordinary course of business, we enter into agreements that contingently require us to indemnify counterparties against third-party claims. These may include: agreements with advertisers and sponsors, under which we may indemnify them against claims arising from their use of our products or services; agreements with customers, under which we may indemnify them against claims arising from their use of our products or services; real estate and equipment leases, under which we may indemnify lessors against third-party claims relating to use of their property; agreements with licensees or licensors, under which we may indemnify the licensee or licensor against claims arising from their use of our intellectual property or our use of their intellectual property; and agreements with initial purchasers and underwriters of our securities, under which we indemnify them against claims relating to their participation in the transactions.

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        The nature and terms of these indemnifications vary from contract to contract, and generally a maximum obligation is not stated. Because we are unable to estimate our potential obligation, and because management does not expect these indemnifications to have a material adverse effect on our consolidated financial position, results of operations or cash flows, no related liabilities are recorded as of December 31, 2004. We hold insurance policies that mitigate potential losses arising from certain indemnifications and, historically, we have not incurred significant costs related to performance under these obligations.

Recent Accounting Pronouncements

        In December 2003, the Financial Accounting Standards Board, or FASB, issued Interpretation No., or FIN, 46R, "Consolidation of Variable Entities", or FIN 46R. FIN 46R replaces the same titled FIN 46 that was issued in January 2003. FIN 46R requires the consolidation of a variable interest entity by a company that bears the majority of risk of loss from the variable entity's activities, is entitled to receive a majority of the variable interest entity's residual returns, or both. The provisions of this interpretation are effective for iVillage beginning in the first quarter of fiscal 2004. iVillage's adoption of this interpretation did not have a material impact on its financial position, cash flows or results of operations.

        In December 2004, the FASB issued Statement of Financial Accounting Standards, or SFAS, No. 123(R), "Share- Based Payments", or SFAS 123(R), which revises SFAS No. 123, "Accounting for Stock-Based Compensation", or SFAS 123, supersedes Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and amends FASB Statement No. 95 "Statement of Cash Flows". The statement requires companies to expense the fair value of employee stock options and other forms of stock-based compensation. The statement addresses the accounting for share-based payment transactions in which iVillage receives employee services in exchange for either equity instruments of iVillage or liabilities that are based on the fair value of iVillage's equity instruments or that may be settled by the issuance of such equity instruments. The effective date of the statement is for periods beginning after June 15, 2005. SFAS 123R permits public companies to adopt its requirements using one of three methods: the "modified prospective" method, the "modified prospective" method to January 1, 2005, or the "modified retrospective" method to all prior years for which SFAS 123 was effective. iVillage has not yet determined which adoption method it will utilize. In addition, iVillage's stock employee purchase plan will need to be modified to comply with SFAS 123(R). The statement could have a significant impact on the consolidated statement of operations as iVillage will be required to expense the fair value of stock option grants.

        In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29", or SFAS 153. SFAS 153 eliminates an exception for nonmonetary exchanges of similar productive assets under APB Opinion No. 29, and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. SFAS 153 is to be applied prospectively and is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. We believe that the future adoption of SFAS 153 will not have a material impact on our financial statements.

Legal Proceedings

        iVillage and Women.com are defendants in class action lawsuits in federal court relating to each company's initial public offering. In June 2003, parties agreed in principle to settle the matter, along with similar lawsuits against more than 300 other issuers. On February 15, 2005, the court issued an opinion and order granting preliminary approval to the settlement and ordering the plaintiffs and issuer defendants to submit to the court a revised settlement stipulation consistent with the court's order. The court has scheduled a conference for March 18, 2005 to discuss the status of the stipulation, to make final determinations as to the form and substance of plaintiff's' required notice to its class-members

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and to schedule a fairness hearing to allow for any plaintiff to object to the settlement. There has been no further ruling on this matter. We believe, based upon the advice of outside legal counsel, that the aforementioned lawsuit and claims asserted against us and our subsidiary pursuant to these complaints are without merit and we intend to vigorously defend against these claims. If the proposed settlement in the initial public offering "laddering" cases is ultimately not approved by the courts, defending against these claims could require the expenditure of significant financial and managerial resources, which could harm our business.

        We are not currently subject to any other material legal proceedings. We may from time to time, however, become a party to various legal proceedings arising in the ordinary course of business.

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Risk Factors

        We operate in an environment that involves a number of risks and uncertainties. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business. If any of the following risks actually occur, our business, operating results and financial condition could be harmed. These risks should be read in conjunction with the other information set forth in this report.

Risks of our Business

We have a limited history of profitability, and we may have further continuing losses from operations.

        We achieved net income on an annual basis for the first time for the year ended December 31, 2004. We have incurred significant net losses on an annual basis in each year of our operations, have a history of negative cash flows and may incur net losses for the foreseeable future. We achieved net income of approximately $2.7 million for the year ended December 31, 2004. We incurred net losses of approximately $27.1 million for the year ended December 31, 2003, and $33.9 million for the year ended December 31, 2002. As of December 31, 2004, we had an accumulated deficit of approximately $491.1 million.

        Although we achieved net income for the year ended December 31, 2004, we cannot assure you that we will be able to sustain or increase net income on a quarterly or annual basis. If our revenues grow slower than we anticipate, or if our operating expenses exceed expectations or cannot be adjusted accordingly, we could continue to suffer losses.

Our quarterly and annual revenues and operating results are not indicative of future performance, are difficult to forecast and have been and are likely to continue to fluctuate.

        We do not believe that period-to-period comparisons of our operating results are necessarily meaningful nor should they be relied upon as reliable indicators of future performance. This makes it difficult to forecast with certainty quarterly and annual revenues and results of operations. In addition, our operating results are likely to fluctuate significantly from fiscal quarter to quarter and year to year as a result of several factors, many of which are outside our control, and any of which could materially harm our business. Some of these factors include:

        Our revenues for the foreseeable future will remain primarily dependent on user traffic levels and advertising activity on our Web sites and, as a result, are difficult to forecast. In addition, the time between the date of initial contact with a potential advertiser or sponsor and the execution of a contract with the advertiser or sponsor may be lengthy, especially for larger, higher rate contracts, and is subject to delays over which we have little or no control, including:

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        We may be unable to adjust spending quickly enough to offset any unexpected reduction in revenues in a particular fiscal quarter or year, which may materially and adversely affect our results of operations.

Our operating results may fluctuate depending on the season, and such fluctuations may affect our stock price.

        We have experienced and expect to continue to experience fluctuations in our operating results because of seasonal fluctuations in traditional online advertising purchasing patterns. The number of our sponsorships and advertisements tend to be significantly lower in the first and third calendar quarters of each year, due primarily to decreased spending because of advertising budgets and retail promotions for the holiday season. However, there can be no assurance that our sales in the remaining quarters will exceed those of the first and third calendar quarters. Further, securities analysts and investors may inaccurately estimate the effects of seasonality on our results of operations in one or more future quarters and, consequently, our operating results may fall below expectations, causing our stock price to decline.

We have a small number of major customers and the loss of any number of these customers or a material reduction in business we receive from any of these customers could adversely affect our business, financial condition and results of operations.

        We anticipate that our results of operations in any given period will continue to depend to a significant extent on revenues from a small number of customers. As a result, the loss of even a small number of our largest customers or a material reduction in the business we receive from any of these customers at any one time could significantly reduce our revenue, which in turn could adversely affect our business, financial condition and results of operations, unless we are able to enter into contracts to replace lost revenues.

        Our five largest customers accounted for approximately 27% of total revenues for each of the years ended December 31, 2004 and 2003 and approximately 38% of total revenues for the year ended December 31, 2002. In 2004, one advertiser, Hearst, a related party, accounted for approximately 10% of our total revenues. No other single customer accounted for more than 10% of our total revenues in 2004. In 2003, Hearst accounted for approximately 11% of our total revenues. No other single customer accounted for more than 10% of our total revenues in 2003. In 2002, Procter and Gamble and Hearst each accounted for approximately 11% of our total revenues, and Unilever accounted for approximately 10% of our total revenues. No other single customer accounted for more than 10% of our total revenues in 2003. At December 31, 2004, no single customer accounted for more than 10% of our total net accounts receivable, and at December 31, 2003, Hearst accounted for approximately 20% of our net accounts receivable.

        During 2004 Wal-Mart, Inc. and its affiliates, or Wal-Mart, indicated to us that they would no longer be utilizing our subsidiary, IVPN, to create and distribute custom publications which were used for baby promotions in Wal-Mart's United States stores. These publications accounted for approximately $4.8 million, or 7% of our total revenues in 2004, approximately $3.9 million, or 7% of our total revenues in 2003 and approximately $1.1 million, or 2% of our total revenues in 2002. A failure to enter into contracts to replace these revenues could adversely affect our business, financial condition and results of operations.

        Because our largest customers have varied over time in the past, we anticipate that they will continue to do so in the future. The significance of revenues from any one of our customers can vary

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on a quarter to quarter basis as a result of the number and timing of such customers' advertising and marketing initiatives and the mix of products and services such customers purchase from us.

Restrictions on our ability to enter into sponsorship, advertising or other business relationships with Hearst's competitors may adversely affect our business.

        Our Web site services agreement governing our magazine content license and hosting relationship with Hearst restricts our ability to enter into relationships with competitors of Hearst. These restrictions may prevent us from expanding our network and enhancing our content and the visibility of our brand, and may cause us to forego potential advertising revenues from competitors of Hearst. Specifically, the agreement provides that we may not, without Hearst's consent:

Our principal investors' investments in our competitors may result in conflicts of interest that could harm our business.

        Our principal investors, such as Hearst and Rho Capital Partners, Inc. may have conflicts of interest by virtue of their own businesses, as in the case of Hearst, or investments in other companies that may compete with us. These investments may result in a conflict of interest for our principal investors or result in the diversion of attractive business opportunities from our principal investors to other companies. We are unable to determine all of the competing investments held by these principal investors. In addition, we do not have the ability to constrain the investment activity of any of our principal investors and therefore cannot predict the extent of any future investments in businesses that are competitive with us.

Our business is highly dependent upon user traffic.

        Our business is inherently dependent upon high user traffic levels. The rates we charge to advertisers and sponsors and the number of products and services we sell are directly related to the number of users visiting iVillage's Web sites. User traffic from certain Web sites that are non-proprietary to iVillage are generally included in the reported information regarding our network of Web sites. These properties include the Hearst magazine Web sites and other parties who have agreed by contract to have traffic from their Web sites incorporated within our network. The number of users visiting our Web sites may decline. In addition, Hearst or other third parties may discontinue allowing us to include their Web sites as part of our network for traffic reporting purposes. Any decline in user traffic levels may cause our revenues to decrease and could have a material adverse affect on our business, financial condition and results of operations.

Our business will be materially adversely affected if we cannot maintain the popularity of our Web site offerings among Internet users.

        We will be successful only if a critical mass of Internet users, especially women, continue to view our Web sites as popular destinations on the Internet. It is difficult to predict the rate at which users will sample our offerings and the extent to which they will become members and/or return users. At any time, users of our services might revert to other offerings. We cannot assure you that widespread use and acceptance of our offerings will occur. If we cannot maintain the popularity of our offerings

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among Internet users, our business, results of operations and financial condition will be materially adversely affected.

There is intense competition among media companies focused on women, and this competition could result in price reductions, reduced margins or loss of market share.

        Increased competition could result in advertising and sponsorship price reductions, reduced margins or loss of market share, any of which could adversely affect our business, financial condition and results of operations. There are a large number of Web sites competing for the attention and spending of members, users and advertisers. Our Web sites compete for members, users and advertisers with the following types of companies:

        Lamaze Publishing's magazines directly compete with publishers of pre- and post-natal publications such as Gruner and Jahr, Primedia and Time Inc. These publishers have substantially greater marketing, research and financial resources than Lamaze Publishing. Increased competition may result in less advertising in Lamaze Publishing's magazines and a decline in Lamaze Publishing's advertising rates, which could adversely affect our business, financial condition and results of operations.

If we fail to attract and retain key personnel, our business would be materially adversely affected.

        Our future success depends to a significant extent on the continued services of our senior management and other key personnel, particularly Douglas W. McCormick, our Chairman of the Board and Chief Executive Officer. Mr. McCormick's current employment agreement expires in May 2005. Although we are currently in discussions with Mr. McCormick related to the renewal of his employment agreement, we cannot assure you that we will be able to retain his services. The loss of the services of Mr. McCormick would likely harm our business. We currently do not maintain "key person" life insurance for any of our senior management.

        We may be unable to retain our key employees or attract, assimilate or retain other highly qualified employees in the future. We have from time to time experienced, and expect to continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications as a result of our financial condition and relatively low common stock price. As a result, we have in the past and may in the future incur increased salary and benefit costs. If we do not succeed in attracting new personnel or retaining and motivating our current personnel, our business, and our ability to develop and execute on our business strategies, will be materially harmed.

We rely on third parties to provide reliable software, systems and related services.

        We depend on various third parties for software, systems and related services, including SAAVIS, Verio, Globix, Google, DoubleClick, Tacoda and Prospero. In addition, we sometimes rely on our customer's software reporting tools to supply us, subject to our monitoring controls, with the

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information to record our revenue. If for any reason one or more of these service providers becomes unable or unwilling to continue to provide services of acceptable quality, at acceptable costs and in a timely manner, our ability to deliver our product and service offerings to our advertisers, sponsors and users could be severely impaired. We would have to identify and qualify substitute service providers, which could be time consuming and difficult and could result in unforeseen operational difficulties. Although we are confident that alternative service providers are available, we cannot assure that we will be able to obtain such services on as favorable terms as we currently receive or in a timely manner.

We rely on third parties to adequately measure the demographics of our user base.

        It is important to our advertisers that we accurately measure the demographics of our user base and the delivery of advertisements on our Web sites. We depend on third parties to provide many of these measurement services and to do so accurately and reliably. If these third parties are unable or unwilling to provide these services to us in the future, we would need to perform them ourselves or obtain them from another provider. This could cause us to incur additional costs or cause interruptions in our business until these services are replaced. Companies may choose not to advertise on our Web sites or may pay us less for our sponsorship or advertising if they perceive our demographic measurements as not reliable.

We are subject to legal proceedings that could result in liability and adversely affect our business.

        From time to time, we have been, and expect to continue to be, subject to legal proceedings that individually, or in the aggregate, could adversely affect our business. Notably, several plaintiffs have filed class action lawsuits in federal court against us, several of our former executives, and our underwriters in connection with our March 1999 initial public offering. A similar class action lawsuit was filed against Women.com, several of our former executives and Women.com's underwriters in connection with Women.com's October 1999 initial public offering. In June 2003, the parties agreed in principle to settle the matter, along with similar lawsuits against other issuers. The plaintiffs filed a motion for preliminary approval of the settlement with the court in June 2004, which was accompanied by a brief filed by the issuer defendants in support of the plaintiffs' motion. Certain of the underwriter defendants formally objected to the settlement. The plaintiffs and issuer defendants separately submitted replies to these objections on August 4, 2004. On February 15, 2005, the court issued an opinion and order granting preliminary approval to the settlement and ordering the plaintiffs and issuer defendants to submit to the court a revised settlement stipulation consistent with the court's order. The court has scheduled a conference for March 18, 2005 to discuss the status of the stipulation, to make final determinations as to the form and substance of plaintiff's' required notice to its class-members and to schedule a fairness hearing to allow for any plaintiff to object to the settlement. There has been no further ruling on this matter. If the proposed settlement is ultimately not approved by the courts, even if these claims are not meritorious, defending against them could require the expenditure of significant financial and managerial resources, which could harm our business.

Our operation of IVPN poses a number of risks that could materially adversely affect our business strategy.

        There are a number of risks in operating IVPN related to Lamaze Publishing, Baby Steps magazine and The Channels, which are all primarily non-Internet businesses, including:

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        Our failure to perform the functions required for the operation of IVPN in an efficient and timely manner could result in a disruption of IVPN's operations that could result in a loss of revenues and have a material adverse effect on our business strategy.

Our business could be adversely affected if transmission of the Channels were interrupted.

        There is a risk that the satellite or the in-hospital delivery system which transmits the Channels may malfunction, which would result in an interruption of broadcasts. Extreme adverse weather conditions or third parties could damage or disable receivers and transmitters on the ground hindering transmission of the Channels' signal. IVIP is currently in negotiations with Ascent and has entered into an interim letter agreement with Ascent, dated as of March 1, 2005, regarding the continued provision of distribution, maintenance and installation services until a definitive services agreement mutually acceptable to the parties can be executed. The interim letter agreement is presently scheduled to expire on March 31, 2005. If we are not able to enter into a definitive agreement or in the event of an unforeseen earlier interruption of service, we would need to negotiate a new contract, find another satellite provider and/or invest in alternative technology to distribute the service. If any of these events occur, there may be a period of time before transmission of all or some of the Channels could resume. Any interruption in our ability to transmit the Channels could jeopardize our viewer base and negatively impact our revenues related to the Channels.

Our ability to offer continuing medical education programs through Healthology could be adversely affected by changes in governmental regulation and industry guidelines.

        We offer online continuing medical education, or CME, to physicians and other healthcare professionals through Healthology. Healthology typically collaborates with a medical society or other healthcare professional association to create a CME, which upon proper review and approval receives the accreditation of such organization. In some instances, Healthology or the accrediting entity receives an educational grant from a pharmaceutical or medical device company to fund the creation and production of the CME.

        In an effort to ensure that CME programs remain independent from the interests of healthcare goods and service providers who fund the development of CME, many entities have revised their standards of accreditation. In addition these sponsorships may be subject to regulation by state and federal agencies. In the event that the sponsorship of CME by pharmaceutical or medical device companies should become subject to additional regulatory scrutiny, any resulting changes to existing regulations or accreditation standards, or changes in internal compliance procedures of sponsors, may result in revision to Healthology's CME offering, a slow approval process for the accreditation, and a reduction in the number of CME sponsorships.

If we are unable to establish or maintain relationships with Healthology's distribution network, our business could be adversely affected.

        Healthology's business depends, in part, on establishing and maintaining syndication distribution partners who are willing to pay content license fees and/or provide revenue to Healthology for advertising proximate to such content. Several of these partners are high-traffic web sites for which there is intense competition for relationships with these entities and placement on their sites. We may be unable to enter into or successfully renew relationships with these entities or sites on commercially reasonable terms or at all. Many companies that Healthology may approach for a strategic relationship or who already have strategic relationships with Healthology may also receive health and medical

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information from other sources. As a result, these companies may be reluctant to enter into or maintain strategic relationships with Healthology. Healthology's revenues could be negatively impacted if we do not establish additional, and maintain their existing, strategic relationships on commercially reasonable terms.

We may not be able to expand our business through acquisitions and joint ventures and, even if we are successful, our operations may be materially adversely affected as a result of an acquisition or joint venture.

        Our business strategy includes growth through business combinations, acquisitions and joint ventures. Our business could be materially adversely affected if we are unable to implement this business strategy. Our ability to implement this business strategy depends in large part on our ability to compete successfully with other entities for acquisition candidates and joint venture partners. Factors affecting our ability to compete successfully in this regard include:

        Many of the entities with which we compete for acquisition candidates and joint venture partners have greater financial resources than we do. In addition, our ability to make acquisitions using our stock has been materially adversely affected by the overall decline in the trading price of our common stock over the last several years.

        If, despite these factors, we are successful in entering into additional business combinations, acquisitions and joint ventures, our business, financial condition and results of operations could be materially adversely affected if we are unable to integrate the operations of the acquired companies or joint ventures. Our ability to integrate the operations of the acquired companies or joint ventures will depend, in part, on our ability to overcome or address:

        In addition, completing acquisitions could require use of a significant amount of our available cash. Furthermore, we may have to issue equity or equity-linked securities to pay for future acquisitions, and any of these issuances could be dilutive to existing and future stockholders. Acquisitions and investments may also have negative effects on our reported results of operations due to acquisition-related charges, amortization of acquired technology and other intangibles, and/or actual or potential liabilities, known and unknown, associated with the acquired businesses or joint ventures. Any of these

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acquisition-related risks or costs could materially adversely affect our business, financial condition and results of operations.

If we fail to maintain effective internal financial and managerial systems, controls and procedures, our results of operations may be materially adversely affected.

        In the past, we have sought cost reductions through increased managerial efficiencies and expense reduction initiatives, including targeted staff reductions. These reductions in workforce placed a significant strain on our managerial staff, financial controls and operational resources as our employees have assumed greater responsibilities and learned to manage their increased workload with reduced resources. We continue to evaluate our operational and financial systems and our managerial controls and procedures to determine what additional changes, if any, might help us to manage our current operations better. We face the risk that our systems, procedures and controls might not be adequate to support our operations or to maintain accountability for our assets. Any such failure could have a material adverse effect on our business, financial condition and results of operations.

Changes in financial accounting standards or practices, including those that require us to recognize employee stock options as a compensation expense, could substantially and adversely affect our financial results.

        The accounting rules applicable to our business have undergone significant changes in recent years, and future changes in accounting regulations and related interpretations and policies, particularly those related to the expensing of employee stock options, could cause us to account for our business in ways that may adversely affect our financial results and investor perception of those results. As permitted by SFAS No. 123, Accounting for Stock-Based Compensation, or SFAS 123, currently we apply Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, or APB No. 25, and related interpretations in accounting for our employee stock—based compensation. Under APB No. 25, no compensation expense is recognized for options granted to employees where the exercise price equals the market price of the underlying stock on the date of grant. On December 16, 2004, FASB issued SFAS 123(R) which requires us, for the period beginning after June 15, 2005, to recognize compensation expense in an amount equal to the fair value of share-based payments, such as stock options and restricted stock, granted to employees. This is expected to have a material impact on our consolidated results of operations, as the stock-based compensation expense would be charged directly against our reported earnings.

        We expect that our implementation of SFAS 123(R) will result in a reduction of our net income or an increase in our losses as a result of these non-cash expenses. In such an event, investor perception of our results of operations may be adversely affected and our stock price may fall.

Risks Related to Our Industry

The operating performance of computer systems and Web servers is critical to our business and reputation.

        Any system failure, including network, software or hardware failure, due to a computer virus or otherwise, that causes an interruption in our Internet offerings could result in reduced traffic on our Web sites and reduced revenues for our business. Substantially all of our communications hardware and some of our other computer hardware operations are located at SAAVIS' facilities in New Jersey, Verio's facilities in California and Globix's facilities in New York. Fire, floods, earthquakes, power loss, telecommunications failures, break-ins and similar events could damage these systems. We do not presently have any secondary "off-site" systems or a formal comprehensive disaster recovery plan.

        Our Web sites could also be affected by computer viruses, electronic break-ins or other similar disruptive problems, such as those historically experienced by several leading Web sites. In addition, our users depend on Internet service providers, online service providers and other Web site operators for access to our Web sites. Many of them have experienced significant outages in the past, and could experience outages, delays and other difficulties due to system failures unrelated to our systems. If we

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experience outages or degraded service, user satisfaction would decrease, we would likely lose advertising revenue and our reputation and brands could be permanently harmed.

        Our insurance policies may not adequately compensate us for any losses that may occur due to any failures or interruptions in our systems. In addition, we cannot assure you that SAAVIS (which purchased the assets of Cable and Wireless Plc and Exodus Communications, Inc. both of which had filed for bankruptcy protection), Verio and Globix will be able to provide sufficient services for us or that we would be able to engage satisfactory alternative service providers.

If the Internet fails to gain further acceptance as a medium for advertising, we would have slower revenue growth than expected and could incur losses.

        We compete with traditional advertising media, including television, radio and print, along with other high-traffic Web sites, for sponsorships and advertising expenditures. Although there are currently several standards to measure the effectiveness of Internet advertising, the industry has had difficulty convincing potential advertisers that Internet advertising is, at minimum, comparable to traditional forms of advertising. Advertisers and advertising agencies that have historically relied on these traditional forms may be reluctant or slow to adopt online advertising. In addition, advertisers and advertising agencies that use the Internet as an advertising medium may find online advertising to be less effective for promoting their products and services than traditional advertising media. Advertisers and advertising agencies that have invested substantial resources in traditional methods of advertising may also be reluctant to reallocate their resources to online advertising. Moreover, software programs that limit or prevent advertising from being delivered to an Internet user's computer are available. Widespread adoption of this software could adversely affect the commercial viability of Internet advertising. If the market for online advertising develops more slowly than we expect, or if we are unable to adapt to new forms of Internet advertising, we would have slower than expected revenue growth and could incur losses, and our business, results of operations and financial condition could be materially adversely affected.

Web-based business models are still evolving and make it difficult to predict our long-term revenues.

        A decrease in revenues relating to changes in Internet advertising pricing models or our inability to convert users to purchasers of our products and services could materially adversely affect our business, results of operations and financial condition. Different pricing models are used to sell advertising on the Internet, including models based on the number of impressions delivered, the number of click-throughs by users and the number of key words to which an advertisement is linked. It is difficult to predict which, if any, of the models will emerge as the industry standard. This uncertainty makes it difficult to project our long-term advertising rates and revenues.

        Furthermore, consumer reluctance to subscribe to or pay for Internet content may limit our ability to supplement Internet advertising as our most significant source of revenue in the foreseeable future. Inability to supplement our advertising revenues could limit our growth and adversely affect our business.

We may be unable to respond to the rapid technological change in our industry.

        Our product and service offerings compete in a market characterized by rapidly changing technologies, frequent innovations and evolving industry standards. A growing number of individuals access the Internet through devices other than personal computers, such as cell phones, personal digital assistants or television set-top devices. The low resolution, functionality and memory currently associated with some of these alternative devices might prevent or impede users from accessing our graphics-rich Web sites. Our future success will depend on our ability to adapt to rapidly changing technologies by continually improving the performance features and reliability of our offerings. We could incur substantial costs to modify our services or infrastructure to adapt to the changing technology environment.

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Possible infringement by third parties of our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.

        We cannot be certain that the steps we have taken to protect our intellectual property rights will be adequate or that third parties will not infringe or misappropriate our proprietary rights. Enforcing our intellectual property rights could entail significant expense and could prove difficult or impossible. Any infringement or misappropriation by third parties could have a material adverse effect on our business, financial condition and results of operations. Furthermore, we have invested resources in acquiring domain names for existing and potential future use. We cannot guarantee that we will be entitled to use these domain names under applicable trademark and similar laws or that other desired domain names will be available.

New privacy and data security laws may require changes in our practices, and there is a potential for enforcement actions due to noncompliance.

        Any new law or regulation pertaining to the Internet, or the application or interpretation of existing laws, could decrease the demand for our services, increase our cost of doing business or otherwise seriously harm our business. There is, and will likely continue to be, an increasing number of laws and regulations pertaining to the Internet. These laws or regulations may relate to liability for information retrieved from or transmitted over the Internet, online content regulation, user privacy, taxation and the quality of products and services. There is a trend toward more burdensome regulations and stiffer penalties, all of which could negatively impact our business. There is also a trend toward giving consumers greater information and greater control over how their personal data is used, and requiring notification where unauthorized access to such data occurs.

        In particular, several jurisdictions, including foreign countries, have recently proposed and/or adopted privacy-related laws that restrict or prohibit unsolicited e-mail solicitations, commonly known as "spamming," and that impose significant monetary and other penalties for violations. These laws may increase concern on the part of advertisers regarding advertising in our e-mail newsletters, and advertisers may seek to impose indemnity obligations on us in an attempt to mitigate any liability under these laws. Moreover, Internet service providers may increasingly block legitimate marketing e-mails in an effort to comply with these laws.

        One such law, the CAN-SPAM Act of 2003, or CAN-SPAM, became effective in the United States on January 1, 2004. CAN-SPAM imposes complex and often burdensome requirements in connection with the sending of commercial e-mail. The language of CAN-SPAM contains ambiguities, and CAN-SPAM has yet to be interpreted by the courts. Depending on how it is interpreted, CAN-SPAM may impose burdens on our e-mail marketing practices, on joint marketing initiatives that we undertake with our business partners, and on features of our services. CAN-SPAM also requires the Federal Trade Commission, or FTC, to report to Congress regarding the advisability of a federal "Do-Not-E-Mail Registry." If the registry is created, it could have a detrimental effect on our ability to continue our e-mail marketing practices as well as advertisers' willingness to participate in e-mail marketing.

        Also regarding CAN-SPAM, the FTC has issued its final rule, to take effect on March 28, 2005, establishing criteria for determining whether the primary purpose of an e-mail message is commercial for purposes of compliance with CAN-SPAM. In adopting the final rule, the FTC rejected many pro-business interpretations of the "primary purpose" standard that had been proposed by marketing companies, and the final rule will impose further burdens on our business.

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        In addition to impacting our business through decreased collection and use of user data, the enactment of privacy and data security laws may increase our legal compliance costs. While we believe that we comply with currently applicable laws, as such laws proliferate there may be uncertainty regarding their application or interpretation, which increases our risk of non-compliance. Even if a claim of non-compliance against us does not ultimately result in liability, investigating a claim may present a significant cost. Future legislation may also require changes in our data collection practices, which may be expensive to implement and may further increase the risk of non-compliance.

        Data security laws are becoming more stringent in the United States and abroad. Third parties are engaging in increased cyber-attacks against companies doing business on the Internet, and individuals are increasingly subjected to identity and credit card theft on the Internet. Although we seek to use what we consider to be industry standard security measures, there is a risk that we may fail to prevent such activities and that users or others may assert claims against us. In addition, the FTC and state consumer protection authorities have brought a number of enforcement actions against U.S. companies for alleged deficiencies in those companies' data security practices, and they may continue to bring such actions. Enforcement actions, which may or may not be based upon actual cyber attacks or other breaches in such companies' data security, present an ongoing risk of liability to us, could result in a loss of users and could damage our reputation.

We may face potential liability, loss of users and damage to our reputation for violation of privacy practices.

        Our privacy policies generally prohibit the sale or disclosure to any third party of any member's personal identifying information for marketing purposes, absent prior consent. Growing public concern about privacy and the collection, distribution and use of information about individuals may subject us to increased regulatory scrutiny and/or litigation. In the past, the FTC has investigated companies that have used personally identifiable information without permission or in violation of a stated privacy policy. If we are accused of violating the stated terms of any of our privacy policies, we may face a loss of users and damage to our reputation and be forced to expend significant amounts of financial and managerial resources to defend against these accusations and we may face potential liability.

        In addition, part of our business involves marketing to consumers who have expressed an interest in receiving health-related information from us. This aspect of our business has grown with our recent acquisition of Healthology, Inc., a company that provides health-related content and marketing offers to consumers. Many jurisdictions, including the United States, have adopted complex and burdensome regulations in connection with marketing activities involving personally identifiable medical information; to the extent that such regulations may apply to us, they create additional business and liability risks, and greater legal compliance costs, for us.

We may be liable if third parties misappropriate our users' personal information.

        Third parties may be able to hack into or otherwise compromise our network security or otherwise misappropriate our users' personal information or credit card information. If our network security is compromised, we could be subject to liability arising from claims related to, among other things, unauthorized purchases with credit card information, impersonation or other similar fraud claims or other misuse of personal information, such as for unauthorized marketing purposes. In such circumstances, we also could be liable for failing to provide timely notice of a data-security breach affecting certain types of personal information. Consumer protection privacy regulations could impair our ability to obtain information about our users, which could result in decreased advertising revenues.