Classmates.com 2007 Annual Report Download - page 90

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UNITED ONLINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING
PRONOUNCEMENTS
Description of Business
United Online, Inc. ("United Online" or the "Company") is a leading provider of consumer Internet and media services through a number of
brands, including Classmates, MyPoints, NetZero, and Juno. The Company's Classmates Media services are online social networking and online
loyalty marketing. The Company's primary Communications services are Internet access and email. On a combined basis, the Company's Web
properties attract a significant number of Internet users each month and the Company offers a broad array of Internet marketing products and
services for advertisers.
United Online is a Delaware corporation that commenced operations in 2001 following the merger of Internet access providers
NetZero, Inc. and Juno Online Services, Inc. (the "Merger"). In April 2004, the Company acquired the Web hosting and domain name
registration business of About Web Services, Inc., and in November 2004, the Company acquired Classmates Online, Inc. ("Classmates"), a
leading provider of online social networking services. In March 2006, the Company acquired The Names Database, a global social networking
service. In April 2006, the Company acquired MyPoints.com, Inc. ("MyPoints"), a leading provider of online loyalty marketing services. The
Company's corporate headquarters are located in Woodland Hills, California, and the Company also maintains offices in New York, New York;
Fort Lee, New Jersey; Renton, Washington; San Francisco, California; Schaumburg, Illinois; Orem, Utah; Erlangen, Germany; Berlin, Germany;
and Hyderabad, India.
The Company believes that its existing cash, cash equivalents and short-term investments, and cash generated from operations will be
sufficient to fund its working capital requirements, capital expenditures, dividend payments, and other obligations through at least the next
twelve months. However, additional capital may be needed in order to fund the Company's operations, expand marketing activities, develop new
or enhance existing services or products, respond to competitive pressures or acquire services, businesses or technologies.
Basis of Presentation
The accompanying consolidated financial statements for the years ended December 31, 2007, 2006 and 2005 include United Online and its
subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial
statements, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair
presentation of the results for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected
for any future periods.
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America
("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent liabilities and the reported amounts of revenues and expenses. Actual results could differ from these estimates and assumptions.
The most significant areas that require management judgment and which are susceptible to possible change in the near term include the
Company's revenue recognition, goodwill, intangible assets and other long-lived assets, member redemption liability, income taxes, and legal
contingencies. The accounting policies for these areas are discussed elsewhere in these consolidated financial statements.
F-8