Juno 2014 Annual Report Download - page 37

Table of Contents
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Our discussion and analysis of our financial condition and results of operations is based upon our audited consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and with the instructions for the
Annual Report on Form 10-K. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities and the reported amounts of revenues and expenses. Actual results
could differ from those estimates and assumptions. Management believes that the following accounting policies, estimates and assumptions made by
management thereunder are the most critical to aid in fully understanding and evaluating our reported financial results. These estimates and assumptions
require management's most difficult, subjective or complex judgment and may be based on matters, the effects of which are inherently uncertain.
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We apply the provisions of Accounting Standards Codification ("ASC") 605, , which provides guidance on the recognition,
presentation and disclosure of revenue in financial statements filed with the Securities and Exchange Commission (the "SEC"). ASC 605 outlines the basic
criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. We recognize revenue 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.
Our 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 of yearbooks and yearbook reprints, including the related shipping and handling fees; the sale of
mobile broadband devices and mobile phones, including the related activation fees and shipping and handling fees; and from the sale of third-party
merchandise.
Service revenues for our Communications services and social networking 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. Our pay accounts generally pay in
advance for their services by credit card, PayPal, automated clearinghouse, 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. We offer alternative payment methods to credit
cards for certain Communications pay service plans. These alternative payment methods currently include payment by money order or payment through a
local telephone company. In circumstances where payment is not received in advance, revenues are only recognized if collectibility is reasonably assured.
Advertising revenues from our Communications services and from our social networking services consist primarily of amounts from our Internet search
provider that are generated as a result of users utilizing such provider's Internet search services, amounts generated from display advertisements, and amounts
generated from referring members to third-party websites or services. We recognize such advertising revenues in the period in which the advertisement is
displayed or, for performance-based arrangements, when the related performance criteria are met. In determining whether an arrangement exists, we ensure
that a written contract is in place, such as a standard insertion order or a customer-specific agreement. We assess whether performance criteria have been met
and whether the fees are fixed or determinable based on a reconciliation of the performance criteria and the payment terms associated with the transaction.
The reconciliation of the performance criteria generally includes a
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