Classmates.com 2007 Annual Report Download - page 101

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UNITED ONLINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING
PRONOUNCEMENTS (Continued)
income from operations, which excludes depreciation and amortization of intangible assets, is the appropriate measure for assessing performance
of its segments and for allocating resources among its segments.
Operating Leases— The Company leases office space, data centers and certain office equipment under operating lease agreements with
original lease periods of up to 10 years. Certain of the lease agreements contain rent holidays and rent escalation provisions. Rent holidays and
rent escalation provisions are considered in determining straight-line rent expense to be recorded over the lease term. The lease term begins on
the date of initial possession of the leased property for purposes of recognizing lease expense on a straight-line basis over the term of the lease.
Lease renewal periods are considered on a lease-by-lease basis and are generally not included in the initial lease term.
Recent Accounting Pronouncements
Fair Value Measurements
In September 2006, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 157, Fair Value Measurements , which
clarifies the definition of fair value, establishes guidelines for measuring fair value, and expands disclosures regarding fair value measurements.
SFAS No. 157 does not require any new fair value measurements and eliminates inconsistencies in guidance found in various prior accounting
pronouncements. SFAS No. 157 was effective for the Company on January 1, 2008. The Company does not expect the adoption of SFAS
No. 157 to have a material impact on its financial position, results of operations and cash flows.
Fair Value Option
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities , which permits
entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at
fair value. SFAS No. 159 was effective for the Company on January 1, 2008. The Company does not expect the adoption of SFAS No. 159 to
have a material impact on its financial position, results of operations and cash flows.
Business Combinations
In December 2007, the FASB issued SFAS No. 141(R), Business Combinations . SFAS No. 141(R) requires an acquirer to measure the
identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their fair values on the acquisition date, with
goodwill being the excess value over the net identifiable assets acquired. SFAS No. 141(R) is effective for financial statements issued for fiscal
years beginning after December 15, 2008. Early adoption is prohibited. The Company has not yet determined the effect on its consolidated
financial statements, if any, upon adoption of SFAS No. 141(R).
Noncontrolling Interests in Consolidated Financial Statements
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB
No. 51.
SFAS No. 160 clarifies that a noncontrolling interest in a subsidiary should be reported as equity in the consolidated financial statements.
The
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