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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)
per share is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to
dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Certain of the Company's restricted stock units are
considered participating securities because they contain a non-forfeitable right to dividends irrespective of whether the awards ultimately vest.
The Company is required to retrospectively adjust earnings per share data to conform to the provisions in this standard. Accordingly, effective
January 1, 2009, the Company computed earnings per common share using the two-class method for all periods presented. See Note 11 for
additional disclosures.
Legal Contingencies —The Company is currently involved in certain legal proceedings and investigations. The Company records liabilities
related to pending litigation when an unfavorable outcome is deemed probable and management can reasonably estimate the amount of loss. The
Company does not record liabilities for pending litigation when there are uncertainties related to assessing either the amount or the probable
outcome of the claims asserted in the litigation. As additional information becomes available, the Company continually assesses the potential
liability related to such pending litigation.
Operating Leases —The Company leases office space, data centers and certain office equipment under operating lease agreements with
original lease periods of up to ten years. Certain of the lease agreements contain rent holidays and rent escalation provisions. Rent holidays and
rent escalation provisions are considered in determining straight-line rent expense to be recorded over the lease term. The lease term begins on
the date of initial possession of the leased property for purposes of recognizing lease expense on a straight-line basis over the term of the lease.
Lease renewal periods are considered on a lease-by-lease basis and are generally not included in the initial lease term.
Recent Accounting Pronouncements
Revenue Recognition —In October 2009, the FASB issued Accounting Standards Update ("ASU") No. 2009-13, Revenue Recognition—
Multiple Deliverable Revenue Arrangements,
as codified in ASC 605. This update addresses the accounting for multiple-deliverable
arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. The amendments in
this update will be effective prospectively for revenue arrangements entered into or materially modified beginning January 1, 2011. Early
adoption is permitted. The Company is currently evaluating the impact, if any, of this update on its consolidated financial statements.
Software —In October 2009, the FASB issued ASU No. 2009-14, Software—Certain Revenue Arrangements That Include Software
Elements
, as codified in ASC 985. The amendments in this update change the accounting model for revenue arrangements that include both
tangible products and software elements. Tangible products containing software components and non-software components that function
together to deliver the tangible product's essential functionality will no longer be within the scope of the software revenue guidance in ASC 985-
605, Software—Revenue Recognition . The amendments in this update will be effective prospectively for revenue arrangements entered into or
materially modified beginning January 1, 2011. Early adoption is permitted. The Company is currently evaluating the impact, if any, of this
update on its consolidated financial statements.
F-19