NetZero 2011 Annual Report Download - page 57

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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 apply the provisions of ASC 740, Income Taxes . Under ASC 740, deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax bases 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. In
accordance with 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. The Company recognizes interest and penalties for uncertain tax
positions in income tax expense.
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 or range of loss. As additional information
becomes available, we continually assess the potential liability related to such pending matter.
Financial Statement Presentation
Revenues
Products Revenues
FTD
Products revenues consist of merchandise revenues and related shipping and service fees, less discounts and refunds, for FTD consumer
orders as well as revenues generated from sales of branded and non-branded hard goods, software and hardware systems, cut flowers, packaging
and promotional products, and a wide variety of other floral-related supplies to floral network members.
Content & Media
Products revenues consist of revenues generated from the sale of yearbook copies and related shipping fees.
54
Year Ended
December 31,
2011 2010
Beginning balance
$
24,866
$
25,755
Accruals for points earned
19,440
19,271
Reduction for redeemed points
(21,394
)
(19,030
)
Changes in allowance for points expected to expire and
weighted
-
average cost of points
(459
)
(1,130
)
Ending balance
$
22,453
$
24,866