Classmates.com 2010 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 our 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 matters when an
unfavorable outcome is deemed probable and management can reasonably estimate the amount of loss. We do not record liabilities for a pending
matter when there are uncertainties related to assessing either the amount or the probable outcome of the claims asserted in the matter. As
additional information becomes available, we continually assess the potential liability related to such pending matter.
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 website services, online advertising tools, telephone
answering, order taking, order transmission, and clearing-house services.
Content & Media and Communications
Content & Media services revenues consist of amounts charged to pay accounts for online nostalgia 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 revenues associated with Internet access. Our Content & Media and Communications services revenues
52
Year Ended
December 31,
2010 2009
Beginning balance
$
25,755
$
25,976
Accruals for points earned
19,271
18,684
Reduction for redeemed points
(19,030
)
(17,465
)
Changes in allowance for points
expected to expire and weighted-
average cost of points
(1,130
)
(1,440
)
Ending balance
$
24,866
$
25,755