Juno 2012 Annual Report Download - page 128

Table of Contents
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

The Company has financing receivables related to equipment sales in the FTD segment. The Company records all financing receivables at fair
value and amortizes such receivables to stated value. The current and noncurrent portions of financing receivables are included in accounts receivable
and other assets, respectively, in the consolidated balance sheets. The Company recognizes interest income as earned. The Company assesses credit
quality indicators based on whether financing receivables are current or past due. Financing receivables are placed on nonaccrual status, with interest no
longer accruing, when a floral network member ceases to be a member. The Company would not expect to resume the accrual of interest income unless
the member becomes active again and such member's receivable balance is current. A financing receivable is 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.
—Inventories consist of finished goods, including floral-related inventories, gift cards related to the Company's member redemption
liability, NetZero 4G mobile broadband service devices, and modems. Inventories are stated at the lower of cost or market value. Inventories are valued
using the first-in-first-out ("FIFO") method, with the exception of domestic floral-related inventory, which is valued using the weighted-average cost
method. The Company's management regularly assesses the valuation of inventory and reviews inventory quantities on hand and, if necessary, records a
provision for excess and obsolete inventory based primarily on the age of the inventory and forecasts of product demand, as well as markdowns for the
excess of cost over the amount we expect to realize from the sale of certain inventory. The Company recorded a $1.2 million loss on the markdown of
NetZero 4G mobile broadband service inventory-related balances during the year ended December 31, 2012.
—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
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.
—The Company applies the provisions of ASC 815, . The Company maintains interest rate cap
instruments to reduce its interest rate risk associated with future cash interest payments on a portion of its outstanding borrowings under the credit
agreement dated June 10, 2011, between FTD Group, Inc. and Wells Fargo Bank, National Association as Administrative Agent for the lenders (the
"Credit Agreement"). In addition, 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, other assets or
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