FTD.com 2011 Annual Report Download - page 118

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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)
considered to be impaired when the Company determines that it is probable that it will not be able to collect amounts due under the contractual
terms. The Company does not record interest income for impaired receivables. If cash is received, the receivable balance is reduced and related
credit allowance adjusted accordingly. Fair value approximates the carrying amount of financing receivables because such receivables are
discounted at a rate comparable to market.
Property and Equipment —Property and equipment are stated at historical cost less accumulated depreciation and amortization.
Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which is generally two to three years for
computer software and equipment, three to seven years for furniture and fixtures, twenty-five to forty years for buildings, and five to forty years
for building improvements. Leasehold improvements, which are included in furniture and fixtures, are amortized using the straight-line method
over the shorter of the lease term or up to ten years. Upon the sale or retirement of property or equipment, the cost and related accumulated
depreciation or amortization is removed from the Company's consolidated financial statements with the resulting gain or loss reflected in the
Company's consolidated statements of operations. Repairs and maintenance costs are expensed as incurred.
Derivative Instruments —The Company applies the provisions of ASC 815, Derivatives and Hedging . The Company enters into forward
foreign currency exchange contracts to reduce the risk that its net investments in foreign subsidiaries, cash flows and earnings will be adversely
affected by foreign currency exchange rate fluctuations. The Company records derivative instruments in either other current assets or accrued
liabilities in the consolidated balance sheets at fair value. The Company records changes in the fair value (i.e., gains or losses) of derivatives as
other income, net, or technology and development expenses in the consolidated statements of operations or in accumulated other comprehensive
loss in the consolidated balance sheets. The forward foreign currency exchange contracts do not contain any credit risk-related contingent
features. The Company's hedging program is not designed for trading or speculative purposes.
Net Investment Hedges—For derivative instruments that are designated and qualify as a hedge of a net investment, the gain or loss is
reported in accumulated other comprehensive loss in the consolidated balance sheets to the extent the hedge is effective, with the related
amounts due to or from counterparties included in accrued liabilities or other current assets, respectively. The Company utilizes the forward-rate
method of assessing hedge effectiveness. Gains or losses related to any ineffective portions of net investment hedges are recognized in other
income, net in the consolidated statements of operations. There was no ineffectiveness related to the Company's foreign currency net investment
hedges for the years ended December 31, 2011, 2010 and 2009. The Company presents the cash flows of net investment hedges in cash used for
investing activities in the consolidated statements of cash flows.
Cash Flow Hedges—The Company enters into forward foreign currency exchange contracts designated as cash flow hedges to hedge
certain forecasted expense transactions denominated in currencies other than the U.S. Dollar. The Company initially reports the gains or losses
related to the effective portion of the hedges as a component of accumulated other comprehensive loss in the consolidated balance sheets and
subsequently reclassifies such gains or losses to technology and development expenses when the hedged expenses are recorded. The Company
excludes the change in the time value of the forward foreign currency exchange contracts from its assessment of hedge
F-10