Classmates.com 2010 Annual Report Download - page 49

Table of Contents
Revenue Recognition
FTD Segment Revenue Recognition —Products revenues and related cost of revenues are generally recognized when products are delivered
to the customers. Shipping and service fees charged to 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 Accounting Standards
Codification ("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.
Content & 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 nostalgia 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 nostalgia services and Communications services consist primarily of amounts from our Internet
search partner that are generated as a result of users utilizing the search partner's services, amounts generated from display advertisements, and
amounts generated from referring members to third-party websites 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.
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