8x8 2015 Annual Report Download - page 63

ADVERTISING COSTS
Advertising costs are expensed as incurred and were $6.8 million, $7.3 million and $6.5 million for the years ended March 31, 2015, 2014 and
2013, respectively.
FOREIGN CURRENCY TRANSLATION
The Company has determined that the functional currency of its UK foreign subsidiary is the subsidiary's local currency, the British Pound
Sterling, which the Company believes most appropriately reflects the current economic facts and circumstances of the UK subsidiary's
operations. The assets and liabilities of the subsidiary are translated at the applicable exchange rate as of the end of the balance sheet period and
revenue and expenses are translated at an average rate over the period presented. Resulting currency translation adjustments are recorded as a
component of accumulated other comprehensive income or loss within the stockholder's equity in the consolidated balance sheets.
BUSINESS SEGMENTS
The Company has one reportable operating segment. The Company's chief operating decision makers, the Chief Executive Officer, Chief
Financial Officer, and Chief Technology Officer, evaluate performance of the Company and makes decisions regarding allocation of resources
based on total Company results (see Note 12).
SUBSCRIBER ACQUISITION COSTS
Subscriber acquisition costs are expensed as incurred and include the advertising, marketing, promotions, commissions, rebates and equipment
subsidy costs associated with the Company's efforts to acquire new subscribers.
INCOME TAXES
Income taxes are accounted for using the asset and liability approach. Under the asset and liability approach, a current tax liability or asset is
recognized for the estimated taxes payable or refundable on tax returns for the current year. A deferred tax liability or asset is recognized for the
estimated future tax effects attributed to temporary differences and carryforwards. If necessary, the deferred tax assets are reduced by the amount
of benefits that, based on available evidence, is more likely than not expected to be realized.
CONCENTRATIONS
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash
equivalents, investments and trade accounts receivable. The Company has cash equivalents and investment policies that limit the amount of
credit exposure to any one financial institution and restrict placement of these funds to financial institutions evaluated as highly credit-worthy.
The Company has not experienced any material losses relating to its investment instruments.
The Company sells its products to business customers and distributors. The Company performs ongoing credit evaluations of its customers'
financial condition and generally does not require collateral from its customers. At March 31, 2015 and 2014, no customer accounted for more
than 10% of accounts receivable.
The Company outsources the manufacturing of its hardware products to independent contract manufacturers. The inability of any contract
manufacturer to fulfill supply requirements of the Company could materially impact future operating results, financial position or cash flows. If
any of these contract manufacturers fail to perform on their obligations to the Company, such failure to fulfill supply requirements of the
Company could materially impact future operating results, financial position and cash flows.
The Company also relies primarily on third party network service providers to provide telephone numbers and PSTN call termination and
origination services for its customers. If these service providers failed to perform their obligations to the Company, such failure could materially
impact future operating results, financial position and cash flows.
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