Stamps.com 2001 Annual Report Download - page 34

Recent Accounting Pronouncements
In June 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS
No. 141 requires business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting, and
broadens the criteria for recording intangible assets separate from goodwill. SFAS No. 142 requires the use of a non-amortization approach to
account for purchased goodwill and certain intangibles. Under a non-amortization approach, goodwill and certain intangibles will not be
amortized into results of operations, but instead would be reviewed for impairment and written down and charged to results of operations only
in the periods in which the recorded value of goodwill and certain intangibles is more than its fair value. We expect that the adoption of SFAS
No. 141 and SFAS No. 142 will not have a material impact on our financial position or the results of our operations.
The FASB also recently issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", applicable to financial
statements issued for fiscal years beginning after December 15, 2001. The FASB's new rules on asset impairment supersede SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", and portions of Accounting Principles
Bulletin Opinion 30, "Reporting the Results of Operations". This Standard provides a single accounting model for long-lived assets to be
disposed of and significantly changes the criteria that would have to be met to classify an asset as held-for-sale. Classification as held-for-sale is
an important distinction since such assets are not depreciated and are stated at the lower of fair value and carrying amount. This Standard also
requires expected future operating losses from discontinued operations to be displayed in the period(s) in which the losses are incurred, rather
than as of the measurement date as presently required. The provisions of this Standard are not expected to have a material impact on our
financial position or our operating results.
Critical Accounting Policies
In response to the SEC's Release No. 33-8040, "Cautionary Advice Regarding Disclosure About Critical Accounting Policy," we identified the
most critical accounting policies upon which our financial status depends. We determined the critical principles by considering accounting
policies that involve the most complex or objective decisions or assessments. We identified our most critical accounting policies to be related to
risk management, use of estimates and revenue recognition. We state these accounting policies in the notes to the consolidated financials
statements and at relevant sections in this management's discussion and analysis.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Our exposure to market rate risk for changes in interest rates relates primarily to our investment portfolio. We have not used derivative financial
instruments in our investment portfolio. Our cash equivalents and investments are comprised of Money Market, U.S. government obligations
and public corporate debt securities with weighted average maturities of less than 90 days at December 31, 2001. Our cash equivalents and
investments, net of restricted cash, approximated $186.2 million and had a related weighted average interest rate of 3.2%. Interest rate
fluctuations impact the carrying value of the portfolio. We do not believe that the future market risks related to the above securities will have
material adverse impact on our financial position, results of operations or liquidity.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Our financial statements, schedules and supplementary data, as listed under Item 14, appear in a separate section of this Report beginning on
page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
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2002. EDGAR Online, Inc.