Incredimail 2012 Annual Report Download - page 107

PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
In the year ended December 31, 2010 the Company accrued interest and penalties related to unrecognized tax benefits in
its tax expenses. During 2010 interest expense amounted to $ 140. Starting 2011, the Company changed the classification
of interest from tax expenses to financial expenses as it distorts its tax expense. Interest for 2011 and 2012 amounted to
income of $ 988 and $ 225 respectively. As the amount included in tax expense for interest during 2010 was immaterial,
the Company did not reclassify such amounts to conform to current year's presentation.
Advertising costs are expensed as incurred and consist primarily of customer acquisition cost. Advertising costs for each
of the three years in the period ended December 31, 2012 amounted to $ 1,782, $ 8,136 and $ 22,270, respectively.
Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and
cash equivalents, restricted cash and trade receivables.
The majority of the Company’
s cash and cash equivalents and restricted cash are invested in dollar instruments with major
banks in Israel and the U.S. deposits in the U.S. may be in excess of insured limits and are not insured in other
jurisdictions. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk.
The Company is subject to a low amount of credit risk with respect to sales of the Company’
s software products and
content database, as these sales are primarily obtained through credit card sales. The Company’
s major customer is
financially sound, and the Company believes low credit risk is associated with this customer. To date, the Company has
not experienced any material bad debt losses.
The Company's liability for severance pay is calculated pursuant to Israel's Severance Pay Law based on its employees'
most recent monthly salaries, multiplied by the number of years of their employment, or a portion thereof, as of the
balance sheet date.
This liability is fully provided for by monthly deposits in insurance policies and by an accrual.
The deposited funds include profits (losses) accumulated up to the balance sheet date. The deposited funds may be
withdrawn only upon the fulfillment of the obligation pursuant to Israel's Severance Pay Law or labor agreements.
NOTE 2:
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SIGNIFICANT ACCOUNTING POLICIES (Cont.)
m.
Advertising costs:
n.
Concentrations of credit risk:
o.
Severance pay:
F
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