Classmates.com 2008 Annual Report Download - page 106

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)
rates, or the Company may suffer losses in principal by selling securities which have declined in market value due to changes in interest rates.
The Company classified all of its short-term investments as available-for-sale. Available-for-sale securities were carried at fair value, with
changes in unrealized gains and losses, net of taxes, reported in the consolidated statements of comprehensive income (loss). Realized gains or
losses and permanent declines in value, if any, on available-for-sale securities were reported in other income (expense), net, in the consolidated
statements of operations. The cost basis of a security that had been sold, and any amount reclassified out of accumulated other comprehensive
income (loss) in the consolidated balance sheets into earnings, was determined by the specific identification method.
The Company classified outstanding interest payments due on its short-term investments as interest receivable, the balance of which was
reflected in other current assets in the consolidated balance sheets.
The Company regularly assessed whether an other-than-temporary impairment loss on its short-term investments had occurred due to
declines in fair value or other market conditions. Declines in fair value that would be considered other than temporary would be recorded as an
impairment charge and reported in the consolidated statements of operations. Factors considered by management in assessing whether an other-
than-temporary impairment had occurred included: the nature of the investment; whether the decline in fair value was attributable to specific
adverse conditions affecting the investment; the financial condition of the investee; the severity and the duration of the impairment; and whether
the Company had the ability to hold the investment to maturity. If it was determined that an other-than-temporary impairment had occurred, the
investment would be written down to its market value at the end of the period in which it was determined that an other-than-temporary decline
had occurred. During the years ended December 31, 2008, 2007 and 2006, the Company did not record any such impairment charges.
Concentrations of Credit and Business Risk —Financial instruments that potentially subject the Company to a concentration of credit risk
primarily consist of cash and cash equivalents, short-term investments and accounts receivable. The Company's accounts receivable are derived
primarily from revenue earned from advertising customers and FTD florist members located in the U.S. and the U.K., and pay accounts. The
Company extends credit based upon an evaluation of the customer's financial condition and, generally, collateral is not required. The Company
maintains an allowance for doubtful accounts receivable based upon the expected collectibility of accounts receivable and, to date, such losses
have been within management's expectations.
The Company evaluates specific accounts receivable where information exists that the customer may have an inability to meet its financial
obligations. In these cases, based on the best available facts and circumstances, a specific allowance is recorded for that customer against
amounts due to reduce the receivable to the amount that is expected to be collected. These specific allowances are re-evaluated and adjusted as
additional information is received that impacts the amount of the allowance. Also, an allowance is established for all customers based on the
aging of the receivables. If circumstances change (i.e., higher than expected defaults or an unexpected material adverse change in a major
customer's ability to meet its financial obligations), the estimates of the recoverability of amounts due to the Company are adjusted.
At December 31, 2008, no individual customer comprised more than 10% of the Company's consolidated accounts receivable balance. At
December 31, 2007, one customer comprised
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