Juno 2014 Annual Report Download - page 97

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Table of Contents




recognizes 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, the Company ensures that a written contract is in place, such as a standard
insertion order or a customer-specific agreement. The Company assesses 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 comparison of the Company's internally-tracked performance data to the contractual performance obligation and,
when available, to third-party or customer-provided performance data.
The Company's Communications products revenues are generated from the sale of mobile broadband service devices and mobile phones, as well as the
related activation fees and shipping and handling fees and are recognized upon delivery of such devices as this is considered a separate earnings process from
the sale of Communications services. Sales of mobile broadband service devices bundled with free service plans and paid service plans, and activation fees,
are allocated using the relative selling price method in accordance with the multiple-element arrangement provisions of ASC 605. The selling prices of the
Company's mobile broadband paid service plans are determined by vendor specific objective evidence, which is based upon the monthly stand-alone selling
price of each plan. The selling prices of the mobile broadband service devices and free service plans are determined by management's best estimate of selling
price, which considers market and economic conditions, internal costs, pricing, and discounting practices. The revenues allocated to the free service plans are
recognized ratably over the service period. Activation fees received up front in excess of the amount allocated to the mobile broadband devices are deferred
and recognized as service revenues over the estimated service period.
Advertising and other revenues for the Company's loyalty marketing service consist primarily of fees generated when emails are transmitted to members,
when members respond to emails and when members complete online transactions. Each of these activities is a discrete, independent activity, which
generally is specified in the agreement with each advertising customer. As the earning activities take place, activity measurement data (examples include the
number of emails delivered and the number of responses received) is accumulated and the related revenues are recorded. The Company's loyalty marketing
service also generates revenues from the sale of gift cards.
The Company's social networking products revenues are derived from the sale of yearbooks and yearbook reprints, including the related shipping and
handling fees. Products revenues from the sale of yearbooks and yearbook reprints are recognized upon delivery to the customer. Shipping and handling fees
charged to customers are recognized at the time the related products revenues are recognized and are included in products revenues. Shipping costs are
included in cost of revenues.
Probability of collection is assessed based on a number of factors, including past transaction history with the customer and the creditworthiness of the
customer. If it is determined that collectibility is not reasonably assured, revenue is not recognized until collectibility becomes reasonably assured, which is
generally upon receipt of cash.
—Cost of revenues primarily includes product costs; shipping and delivery costs; printing and postage costs; costs of points earned by
members of the Company's loyalty marketing service; telecommunications and data center costs; depreciation of network computers and equipment;
F-15