Classmates.com 2008 Annual Report Download - page 109

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)
impairment review include, but are not limited to, a significant adverse change in legal factors or in the business climate, an adverse action or
assessment by a regulator, unanticipated competition, a loss of key management or other personnel, significant changes in the manner of the
Company's use of the acquired assets or the strategy for the acquired business or the Company's overall business, significant negative industry or
economic trends, or significant underperformance relative to expected historical or projected future results of operations.
Indefinite-Lived Intangible Assets
Testing indefinite-lived intangible assets, other than goodwill, for impairment requires a one-step approach under SFAS No. 142. The
Company tests indefinite-lived intangible assets for impairment on an annual basis, or more frequently, if events occur or circumstances change
that indicate they may be impaired. The fair values of indefinite-lived intangible assets are compared to their carrying values and if the carrying
amount of indefinite-lived intangible assets exceeds the fair value, an impairment loss is recognized equal to the excess.
The process of estimating the fair value of indefinite-lived intangible assets is subjective and requires the Company to make estimates that
may significantly impact the outcome of the analyses. Such estimates include, but are not limited to, future operating performance and cash
flows, cost of capital, terminal values, and remaining economic lives of assets.
Goodwill
Testing goodwill for impairment involves a two-step process. The first step of the impairment test involves comparing the estimated fair
values of each of the Company's reporting units with their respective net book values, including goodwill. If the estimated fair value of a
reporting unit exceeds its net book value, goodwill is considered not to be impaired and no additional steps are necessary. If, however, the
estimated fair value of the reporting unit is less than its net book value, including goodwill, then the carrying amount of the goodwill is
compared with its implied fair value. If the carrying amount of goodwill exceeds the implied fair value of that goodwill, an impairment loss is
recognized in an amount equal to the excess.
Intangible Assets and Other Long-Lived Assets —The Company accounts for identifiable intangible assets and other long-lived assets in
accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets , which addresses financial accounting and
reporting for the impairment and disposition of identifiable intangible assets and other long-lived assets. Intangible assets acquired in a business
combination are initially recorded at management's estimate of their fair values. The Company evaluates the recoverability of identifiable
intangible assets and other long-lived assets, other than indefinite-lived intangible assets, for impairment when events occur or circumstances
change that would indicate that the carrying amount of an asset may not be recoverable. Events or circumstances that may indicate that an asset
is impaired include, but are not limited to, significant decreases in the market value of an asset, significant underperformance relative to expected
historical or projected future operating results, a change in the extent or manner in which an asset is used, shifts in technology, loss of key
management or other personnel, significant negative industry or economic trends, changes in the Company's operating model or strategy, and
competitive forces. In determining if an impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and
ultimate disposition of these assets. If an impairment is indicated based on a comparison of the
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