NetZero 2011 Annual Report Download - page 52

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Table of Contents
statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent liabilities and the reported amounts of revenues and expenses. Actual results could differ from those estimates
and assumptions. The results of operations for interim or transition periods are not necessarily indicative of the operating results for a full year.
Management believes that the following accounting policies, estimates and assumptions made by management thereunder are the most critical to
aid in fully understanding and evaluating our reported financial results. These estimates and assumptions require management's most difficult,
subjective or complex judgment and may be based on matters the effect of which are inherently uncertain.
Revenue Recognition
We apply the provisions of Accounting Standards Codification ("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.
FTD Segment Revenue Recognition —Product revenues and the 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 related product revenue is recognized
and are included in products revenues. Shipping and delivery costs are included in cost of revenues. FTD's consumer businesses generally
recognize revenue 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 revenue in accordance with 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 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 has been provided.
Content & Media Segment and Communications Segment Revenue Recognition —Revenues are comprised of product revenues, which are
derived from the sale of yearbook copies and related shipping fees, and services revenues, which are derived primarily from fees charged to pay
accounts, and advertising revenues.
Our 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 the 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 our online nostalgia services and for our 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 services by credit
card, and revenue is then recognized ratably over the service period. Advance payments from pay accounts are
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