Classmates.com 2004 Annual Report Download - page 61

in the local currency of our subsidiaries, the foreign currency translation adjustments are reflected as a component of stockholders' equity and do
not impact operating results. Revenues and expenses in foreign currencies translate into higher or lower revenues and expenses in U.S. dollars as
the U.S. dollar weakens or strengthens against other currencies. Therefore, changes in exchange rates may negatively affect our consolidated
revenues and expenses (as expressed in U.S. dollars) from foreign operations. Currency transaction gains or losses arising from transactions in
currencies other than the functional currency are included in operating expenses. While we have not engaged in foreign currency hedging, we
may in the future use hedging programs, currency forward contracts, currency options and/or other derivative financial instruments commonly
utilized to reduce financial market risks if it is determined that such hedging activities are appropriate to reduce risk.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
For financial statements, see the Index to Consolidated Financial Statements on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the
Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are
effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act and are effective in ensuring that information required to be disclosed by the Company in
the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including the
Company's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management's Report on Internal Control Over Financial Reporting
Management of United Online, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. The
Company's internal control over financial reporting has been designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted
in the United States of America.
The Company's internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect transactions and dispositions of assets of the Company; provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted
in the United States of America, and that receipts and expenditures are being made only in accordance with authorization of management and
directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Company's assets that could have a material effect on the Company's financial statements.
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