eFax 2015 Annual Report Download - page 67

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recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related
appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. If it is not
more likely than not that the benefit will be sustained on its technical merits, no benefit will be recorded. Uncertain income tax positions that relate only to timing of when an item is
included on a tax return are considered to have met the recognition threshold. j2 Global recognized accrued interest and penalties related to uncertain income tax positions in income
tax expense on its consolidated statement of income.
(q) Share-BasedCompensation
j2 Global accounts for share-based awards in accordance with the provisions of FASB ASC Topic No. 718, Compensation - Stock Compensation (“ASC 718”).
Accordingly, j2 Global measures share-based compensation expense at the grant date, based on the fair value of the award, and recognizes the expense over the employee's requisite
service period using the straight-line method. The measurement of share-based compensation expense is based on several criteria, including but not limited to the valuation model
used and associated input factors, such as expected term of the award, stock price volatility, risk free interest rate, dividend rate and award cancellation rate. These inputs are
subjective and are determined using management's judgment. If differences arise between the assumptions used in determining share-based compensation expense and the actual
factors, which become known over time, j2 Global may change the input factors used in determining future share-based compensation expense. Any such changes could materially
impact the Company's results of operations in the period in which the changes are made and in periods thereafter. The Company estimates the expected term based upon the historical
exercise behavior of our employees.
j2 Global accounts for option grants to non-employees in accordance with FASB ASC Topic No. 505, Equity, whereby the fair value of such options is determined using the
Black-Scholes option pricing model at the earlier of the date at which the non-employee's performance is complete or a performance commitment is reached.
(r) EarningsPerCommonShare
EPS is calculated pursuant to the two-class method as defined in ASC Topic No. 260, Earnings per Share (“ASC 260”), which specifies that all outstanding unvested share-
based payment awards that contain rights to nonforfeitable dividends or dividend equivalents are considered participating securities and should be included in the computation of
EPS pursuant to the two-class method.
Basic EPS is calculated by dividing net distributed and undistributed earnings allocated to common shareholders, excluding participating securities and the net income
attributable to noncontrolling interest, by the weighted-average number of common shares outstanding. The Company's participating securities consist of its unvested share-based
payment awards that contain rights to nonforfeitable dividends or dividend equivalents. Diluted EPS includes the determinants of basic EPS and, in addition, reflects the impact of
other potentially dilutive shares outstanding during the period. The dilutive effect of participating securities is calculated under the more dilutive of either the treasury method or the
two-class method.
(s) Research,DevelopmentandEngineering
Research, development and engineering costs are expensed as incurred. Costs for software development incurred subsequent to establishing technological feasibility, in the
form of a working model, are capitalized and amortized over their estimated useful lives. To date, software development costs incurred after technological feasibility has been
established have not been material.
(t) SegmentReporting
FASB ASC Topic No. 280, Segment Reporting (“ASC 280”), establishes standards for the way that public business enterprises report information about operating segments
in annual consolidated financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. ASC 280 also
establishes standards for related disclosures about products and services, geographic areas and major customers. As a result of the acquisition of Ziff Davis, Inc., the Company
operates as two segments: (1) Business Cloud Services and (2) Digital Media.
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