Juno 2014 Annual Report Download - page 40

Table of Contents
We evaluate the recoverability of identifiable intangible assets and other long-lived assets for impairment when events occur or circumstances change that
would indicate that the carrying amount of an asset may not be recoverable. Events or circumstances that may indicate that an asset is impaired include, but
are not limited to, significant decreases in the market value of an asset, significant underperformance relative to expected historical or projected future
operating results, a change in the extent or manner in which an asset is used, shifts in technology, loss of key management or other personnel, significant
negative industry or economic trends, changes in our operating model or strategy, and competitive forces. In determining if an impairment exists, we estimate
the undiscounted cash flows to be generated from the use and ultimate disposition of these assets. If an impairment is indicated based on a comparison of the
assets' carrying amounts and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amounts of the assets exceed
the respective fair values of the assets. Definite-lived intangible assets are amortized on either a straight-line basis or an accelerated basis over their estimated
useful lives, ranging from two to ten years. Our identifiable intangible assets were acquired primarily in connection with business combinations.
The process of evaluating the potential impairment of long-lived intangible assets is subjective and requires significant judgment on matters such as, but
not limited to, the asset group to be tested for recoverability. We are also required to make estimates that may significantly impact the outcome of the
analyses. Such estimates include, but are not limited to, future operating performance and cash flows, cost of capital, terminal values, and remaining
economic lives of assets.
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Member redemption liability for loyalty marketing service points represents the estimated costs associated with the obligation of MyPoints to redeem
outstanding points accumulated by its loyalty marketing service members, less an allowance for points expected to expire prior to redemption. The estimated
cost of points is primarily presented in cost of revenues, except for the portion related to member acquisition activities, internal marketing surveys and other
non-revenue generating activities, which are presented in sales and marketing expenses. The member redemption liability is recognized when members earn
points, less an allowance for points expected to expire, and is reduced when members redeem accumulated points upon reaching required redemption
thresholds.
MyPoints members may redeem points for third-party gift cards and other rewards. Members earn points when they respond to direct marketing offers
delivered by MyPoints, purchase goods or services from advertisers, engage in certain promotional campaigns of advertisers, or engage in other specified
activities.
The member redemption liability is estimated based upon the weighted-average cost and number of points that may be redeemed in the future. The
weighted-average cost of points is calculated by taking the total cost of items fulfilled divided by total points redeemed. MyPoints purchases gift cards and
other awards from merchants at a discount and sets redemption levels for its members. The discounts and points needed to redeem awards vary by merchant
and award denomination. MyPoints has the ability to adjust the number of points required to redeem awards to reflect changes in the cost of awards.
MyPoints accounts for and reduces the gross points issued by an estimate of points that will never be redeemed by its members. This reduction is
calculated based on an analysis of historical point-earning trends, redemption activities and individual member account activity. MyPoints' historical
analysis takes into consideration the total points in members' accounts that have been inactive for six 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
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