Classmates.com 2011 Annual Report Download - page 122

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)
Revenue Recognition —The Company applies the provisions of ASC 605, Revenue Recognition , which provides guidance on the
recognition, presentation and disclosure of revenue in financial statements filed with the Securities and Exchange Commission. ASC 605
outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. The
Company recognizes revenues 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.
FTD Segment Revenue Recognition—Product revenues and the related cost of revenues are recognized when products are delivered to
customers. Shipping and service fees charged to customers are recognized at the time the related product revenues are recognized and are
included in products revenues. Shipping and delivery costs are included in cost of revenues. FTD's consumer businesses generally recognize
revenues on a gross basis because FTD bears the risks and rewards associated with the revenue-
generating activities by (i) acting as a principal in
the transaction; (ii) establishing prices; (iii) being responsible for fulfillment of the order by the floral network members and third-party
suppliers; (iv) taking the risk of loss for collection, delivery and returns; and (v) marketing the products and services.
FTD also sells computer systems to its floral network members and recognizes revenues in accordance with ASC 985, Software . FTD
recognizes revenues on hardware which is sold without software at the time of delivery. For hardware sales that include software, revenues are
recognized when delivery, installation and customer acceptance have all occurred.
Services revenues based on orders sent to floral network members are recognized in the period in which the orders are delivered. Monthly
fees, recurring fees and other floral network service-based fees are recognized in the period in which the related service is provided.
Content & Media Segment and Communications Segment Revenue Recognition—The Company's online nostalgia product revenues are
derived from the sale of yearbook copies and related shipping fees. Product revenues from the sale of yearbook copies are recognized when
products are delivered to the customer. Shipping fees charged to customers are recognized at the time the related product revenue is recognized
and are included in products revenues. Shipping costs are included in cost of revenues.
Service revenues for the Company's online nostalgia services and for its Communications services are derived primarily from fees charged
to pay accounts and are recognized in the period in which fees are fixed or determinable and the related services are provided to the customer.
The Company's pay accounts generally pay in advance for their services by credit card, and revenues are then recognized ratably over the service
period. Advance payments from pay accounts are recorded on the consolidated balance sheets as deferred revenue. The Company offers
alternative payment methods to credit cards for certain Communications pay service plans. These alternative payment methods currently include
use of automated clearing-house, payment by personal check or money order, or payment through a local telephone company. In circumstances
where payment is not received in advance, revenues are only recognized if collectibility is also reasonably assured.
Advertising revenues from the Company's online nostalgia services and from its Communications services consist primarily of amounts
from its Internet search partner that are generated as a result of
F-14