Classmates.com 2008 Annual Report Download - page 77

Table of Contents
employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service
as directors, officers or employees. We have also agreed to indemnify certain former officers, directors and employees of acquired companies in
connection with the acquisition of such companies. We maintain director and officer insurance, which may cover certain liabilities arising from
our obligation to indemnify our directors and certain of our officers and employees, and former officers, directors and employees of acquired
companies, in certain circumstances.
It is not possible to determine the maximum potential amount of exposure under these indemnification agreements due to the limited history
of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Such indemnification agreements
may not be subject to maximum loss clauses.
Off-Balance Sheet Arrangements
At December 31, 2008, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material
effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources.
Recent Accounting Pronouncements
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. Among other things, SFAS No. 141(R) establishes new guidelines for
the expensing of transaction and restructuring costs, fair value measurement of contingent consideration in earnings and capitalization of in-
process research and development. SFAS No. 141(R) is effective for financial statements issued for fiscal years beginning after December 15,
2008 and early adoption is prohibited. SFAS No. 141(R) requires prospective application for all acquisitions after the date of adoption. We
expect SFAS No. 141(R) to have an impact on how acquisitions are reflected in the consolidated financial statements when effective, but the
timing, nature and magnitude of the specific effects will depend upon the nature, terms and size of any acquisitions that we consummate after the
effective date.
Additionally, for business combinations in which the acquisition date is prior to the effective date of SFAS No. 141(R), the acquirer is
required to apply the requirements of SFAS No. 109, Income Taxes , as amended by SFAS No. 141(R), prospectively. After the effective date of
SFAS No. 141(R), changes in the valuation allowance for acquired deferred tax assets and dispositions of uncertain income tax positions must be
recognized as an adjustment to income tax expense rather than through goodwill. The impact of the adoption of SFAS No. 141(R) on our
consolidated financial statements will largely be dependent on the size and nature of the business combinations completed after the adoption of
this statement.
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 calculation of earnings per share will continue to be based on income amounts attributable to the parent. SFAS No. 160 is effective for
financial statements issued for fiscal years beginning after December 15, 2008. Early adoption is prohibited. We do not expect the impact of the
adoption of SFAS No. 160 to have a material impact on our consolidated financial statements.
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