Classmates.com 2009 Annual Report Download - page 54

Table of Contents
The following table sets forth, for the periods presented, a reconciliation of the changes in the member redemption liability (in thousands):
Income Taxes
We account for income taxes under ASC 740, Income Taxes . Under ASC 740, deferred income tax assets and liabilities are determined
based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. We record a valuation allowance to reduce our deferred tax assets to the
amount that is more likely than not to be realized. In evaluating our ability to recover our deferred tax assets, we consider all available positive
and negative evidence, including our operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction-by-
jurisdiction basis. Under ASC 740, we recognize, in our consolidated financial statements, the impact of tax positions that are more likely than
not to be sustained upon examination based on the technical merits of the positions.
Legal Contingencies
We are currently involved in certain legal proceedings and investigations. We record liabilities related to pending litigation when an
unfavorable outcome is deemed probable and management can reasonably estimate the amount of loss. We do 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, we continually assess the potential liability related to such pending litigation.
Financial Statement Presentation
Revenues
Services Revenues
FTD
FTD services revenues consist of fees charged to its floral network members for access to the FTD and Interflora brands and the Mercury
Man logo, access to the floral networks, credit card processing services, e-commerce Web sites services, online advertising tools, and telephone
answering, order-taking, transmission, and clearing-house services.
Classmates Media and Communications
Classmates Media services revenues consist of amounts charged to pay accounts for social networking services. Communications services
revenues consist of amounts charged to pay accounts for Internet access, email, Web hosting, Internet security, and other services, with
substantially all of such
52
Year Ended
December 31,
2009 2008
Beginning balance
$
25,976
$
24,560
Accruals for points earned
18,684
23,356
Reduction for redeemed points
(17,465
)
(22,604
)
Converted points
—
1,846
Changes in allowance for points
expected to expire and weighted-
average cost of points
(1,440
)
(1,182
)
Ending balance
$
25,755
$
25,976