Classmates.com 2009 Annual Report Download - page 49

Table of Contents
customers are recognized at the time the products revenue is recognized and are included in products revenue. Shipping and delivery costs are
included in cost of revenues. FTD's consumer businesses generally recognize revenue on a gross basis as FTD bears the risks and rewards
associated with the revenue generating activities by: (1) acting as a principal in the transaction; (2) establishing prices; (3) being responsible for
fulfillment of the order by our floral network members and third-party suppliers; (4) taking the risk of loss for collection, delivery and returns;
and (5) marketing the products and services.
FTD also sells computer systems to its floral network members and recognizes revenue in accordance with ASC 985, Software . FTD
recognizes revenue on hardware which is sold without software at the time of delivery. For hardware sales that include software, revenue is
recognized when delivery, installation and customer acceptance have all occurred.
Services revenues based on enabling the delivery of orders by floral network members are generally recognized in the period in which the
orders are delivered. Monthly, recurring fees and other floral network service-based fees are recognized in the period in which the service has
been provided.
Classmates Media Segment and Communications Segment Revenue Recognition —Revenues are comprised of services revenues, which are
derived primarily from fees charged to pay accounts, and advertising revenues. We apply the provisions of ASC 605, Revenue Recognition,
which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. ASC 605 outlines
the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. We
recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the fee is fixed or
determinable, no significant Company obligations remain, and collectibility is reasonably assured.
Services revenues for our online social networking services and Communications services are recognized in the period in which fees are
fixed or determinable and the related services are provided to the customer. Our pay accounts generally pay in advance for their service by credit
card, and revenue is then recognized ratably over the service period. Advance payments from pay accounts are recorded on the consolidated
balance sheets as deferred revenue. We offer alternative payment methods to credit cards for certain pay service plans. These alternative
payment methods currently include use of ACH, payment by personal check or money order, or payment through a local telephone company. In
circumstances where payment is not received in advance, revenue is only recognized if collectibility is reasonably assured.
Advertising revenues from our online social networking services and Communications services consist primarily of amounts from Internet
search partners that are generated as a result of users utilizing partner Internet search services, amounts generated from the display of third-party
offers at the end of Classmates' pay account registration process, amounts generated from other display advertisements, and amounts generated
from referring members to third-party Web sites or services. We recognize such advertising revenues in the period in which the advertisement is
displayed or, for performance-based arrangements, when the related performance criteria are met. In determining whether an arrangement exists,
we ensure that a written contract is in place, such as a standard insertion order or a customer-
specific agreement. We assess whether performance
criteria have been met and whether the fees are fixed or determinable based on a reconciliation of the performance criteria and the payment terms
associated with the transaction. The reconciliation of the performance criteria generally includes a comparison of internally-tracked performance
data to the contractual performance obligation and, when available, to third-party or customer-provided performance data.
Advertising revenues for our online loyalty marketing service consist primarily of fees generated when emails are transmitted to members,
when members respond to emails and when members complete online transactions. Each of these activities is a discrete, independent activity,
which generally
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