Classmates.com 2008 Annual Report Download - page 105

Table of Contents
UNITED ONLINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING
PRONOUNCEMENTS (Continued)
and the reported amounts of revenues and expenses. Actual results could differ from these estimates and assumptions.
The most significant areas of the consolidated financial statements that require management judgment and which are susceptible to possible
change in the near term include the Company's revenue recognition, business combinations, goodwill and indefinite-lived intangible assets,
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.
Reclassifications —Certain prior year amounts have been reclassified to conform to the current year presentation. These changes had no
impact on the previously reported consolidated results of operations or stockholders' equity.
Accounting Policies
Segments —The Company complies with the reporting requirements of Statement of Financial Accounting Standards ("SFAS") No. 131,
Disclosures about Segments of an Enterprise and Related Information
. In August 2008, the Company completed the acquisition of FTD. FTD's
operating results are now reported as the FTD segment, which is aligned with how management measures and reviews segment performance for
internal reporting purposes in accordance with the "management approach" defined in SFAS No. 131. Management has determined that segment
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.
Cash, Cash Equivalents and Short-Term Investments —The Company considers cash equivalents to be only those investments which are
highly liquid, readily convertible to cash and which have a maturity date within ninety days from the date of purchase. The Company's short-
term investments consisted of available-for-sale securities with maturities exceeding ninety days from the date of purchase. Consistent with
SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, the Company classified these securities, all of which had
readily determinable fair values and which were highly liquid, as short-term.
In connection with the FTD acquisition, the Company liquidated its short-term investments portfolio and, at December 31, 2008, had no
short-term investments. The Company's short-term investments at December 31, 2007 consisted of municipal securities. Additionally, during
2007, the Company liquidated, without any losses in principal, its investments in auction rate securities and did not hold any auction rate
securities at December 31, 2008 or 2007. The primary objective of the Company's short-term investments portfolio was the preservation of
principal and liquidity while maximizing yield without significantly increasing risk. The Company's investment policy requires a minimum long-
term credit rating of A, and if a long-term credit rating is not available, the Company requires a minimum short-term credit rating of A1 and P1.
Furthermore, by policy, the Company limits the amount of credit exposure to any one issuer. The Company's investments, at times in both fixed-
rate and variable-rate interest-earning instruments, carried a degree of interest rate risk. Fixed-rate securities may have their fair market value
adversely impacted due to a rise in interest rates, while variable-rate securities may produce less income than expected if interest rates fall. Due
in part to these factors, any future investment income may fall short of expectations due to changes in interest
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