Stamps.com 2007 Annual Report Download - page 29

a percentage of total revenue, sales and marketing expense increased one percentage point to 33% in 2006 from 32% in
2005.
Research and Development. Research and development expense increased 34% from $6.6 million in 2005 to $8.8 million in
2006. This increase is primarily due to the increase in salary, software maintenance, and depreciation expense. Additionally, our
research and development expense for 2006 included approximately $799,000 of stock-based employee compensation expense
related to our adoption of FASB 123(R) in 2006. We did not incur a similar charge in 2005. As a percentage of total revenue,
research and development expense decreased one percentage point to 10% in 2006 from 11% in 2005.
General and Administrative. General and administrative expense increased 21% from $9.6 million in 2005 to $11.6 million
in 2006, primarily due to the increase in salary expense and insurance expense. Additionally, included in general and
administrative for 2006 included approximately $1.2 million of stock-based employee compensation expense related to our
adoption of FASB 123(R) in 2006. We did not incur a similar charge in 2005. As a percentage of total revenue, general and
administrative expense decreased two percentage points to 14% in 2006 from 16% in 2005.
Other Income, Net. Other income, net increased 128% from $2.2 million in 2005 to $5.1 million in 2006. As a percentage of
total revenue, other income, net increased two percentage points to 6% in 2006 as compared to 4% in 2005. The increase, both
on an absolute basis and as a percentage of total revenue, is due to the increase in interest rates and invested balance as we
maintain our profitability.
Liquidity and Capital Resources
As of December 31, 2007 and 2006, we had approximately $91 million and $106 million in cash, restricted cash and short-
term and long-term investments, respectively. We invest available funds in short and long term money market funds, commercial
paper, corporate notes and municipal securities and do not engage in hedging or speculative activities.
In November 2003, we entered into a facility lease agreement commencing in March 2004 for our new corporate
headquarters with aggregate lease payments of approximately $4.0 million through February 2010.
The following table is a schedule of our significant contractual obligations and commercial commitments which is comprised
of the future minimum lease payments under operating leases at December 31, 2007 (in thousands):
During 2007, we repurchased approximately 2.5 million shares of our common stock for approximately $33.3 million. We
will consider repurchasing stock during our current repurchase program by evaluating such factors as the price of the stock, the
daily trading volume and the availability of large blocks of stock and any additional constraints related to material inside
information we may possess.
Operating
Years ended:
2008
751
2009
794
2010
134
2011
—
Thereafter
—
$
1,679
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Net cash provided by operating activities was $16.9 million and $22.4 million for 2007 and 2006, respectively. The decrease
in net cash provided by operating activities is primarily due to the increase in sales and marketing and legal expenses.
Net cash provided (used) by investing activities was $46.9 million and ($12.9) million for 2007 and 2006, respectively. The
increase in net cash provided by investing activities is primarily due to the sale of investments as we executed our stock
repurchase plan in 2007.
Net cash used by financing activities was ($31.9) million and ($18.5) million for 2007 and 2006, respectively. The increase
in net cash used in financing activities resulted primarily from the repurchase of our Company’s common stock.