Juno 2013 Annual Report Download - page 107

Table of Contents
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


months or longer, less an estimated reactivation rate, plus an estimate for future cancelations of points that have not yet been outstanding for 180 days.
Changes in, among other factors, the net number of points issued, redemption activities and members' activity levels could materially impact the member
redemption liability.
Points in active MyPoints accounts do not expire; however, unredeemed points expire after twelve consecutive months of inactivity. For purposes
of the member redemption liability, "inactive" means a lack of all of the following: email response; survey completion; profile update; and any point-
earning or point-redeeming transaction. The canceling or disabling of inactive MyPoints accounts would have no impact on the Company's consolidated
financial statements, as the Company fully considers inactive MyPoints accounts when establishing the member redemption liability, as discussed
above.
—The Company measures its contingent consideration liability at fair value on a recurring basis
using significant unobservable inputs classified within Level 3 of the fair value hierarchy. Contingent consideration—fair value adjustment includes
changes in fair value measurements of the contingent consideration, as well as interest expense related to the contingent consideration, and is recorded in
the consolidated statements of operations. The current and noncurrent portions of the related liability are included in accrued liabilities and other
liabilities, respectively, in the consolidated balance sheets. Changes to one or multiple inputs to the Monte-Carlo simulation used to estimate fair value,
including the discount rate, growth rates, volatility rates, the estimated number of daily registrations, and the estimated rate of conversion of new
subscribers to pay accounts, could significantly impact the estimated fair value of the contingent consideration. The Company reviews and reassesses
the estimated fair value of the contingent consideration on a quarterly basis, and future fair value estimates could differ from the initial estimate.
—The Company applies the provisions of ASC 605, , which provides guidance on the recognition,
presentation and disclosure of revenue in financial statements filed with the Securities and Exchange Commission ("SEC"). ASC 605 outlines the basic
criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. The Company recognizes
revenues 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. Revenues exclude sales taxes collected.
Revenues are comprised of services revenues, which are derived primarily from fees charged to pay accounts; advertising and other revenues; and
products revenues, which are derived primarily from the sale mobile broadband service devices and related shipping and handling fees, from the sale of
yearbook reprints and related shipping fees, and from the sale of third-party merchandise.
Service revenues for the Company's social networking services and for its Communications services are derived primarily from fees charged to
pay accounts and are recognized in the period in which fees are fixed or determinable and the related services are provided to the customer. The
Company's pay accounts generally pay in advance for their services by credit card, PayPal or check, and revenues are then recognized ratably over the
service period. Advance payments from pay accounts are recorded on the consolidated balance sheets as deferred revenue. The Company offers
alternative payment methods to credit cards for certain Communications pay service plans. These alternative payment methods currently include use of
automated clearinghouse, payment by money order, or payment through a local
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