Stamps.com 2007 Annual Report Download - page 31

generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007 and should be applied prospectively, except in the
case of a limited number of financial instruments that require retrospective application. However in December 2007, the FASB
issued a proposed staff position that would delay the effective date of SFAS 157 for nonfinancial assets and nonfinancial
liabilities to fiscal years beginning after November 15, 2008. We do not believe that the adoption of SFAS 157 will materially
impact our financial statements.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities —
including an amendment of FAS 115” (SFAS 159). SFAS 159 allows entities to choose, at specified election dates, to measure
eligible financial assets and liabilities at fair value that are not otherwise required to be measured at fair value. If a company
elects the fair value option for an eligible item, changes in that item’s fair value in subsequent reporting periods must be
recognized in current earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007. We do not believe that
the adoption of SFAS 159 will materially impact our financial statements.
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations” (SFAS 141R). SFAS 141R
establishes principles and requirements for how an acquirer in a business combination recognizes and measures in its financial
statements the identifiable assets acquired, liabilities assumed, and any noncontrolling interests in the acquiree, as well as the
goodwill acquired. Significant changes from current practice resulting from SFAS 141R include the expansion of the definitions
of a “business” and a “business combination.” For all business combinations (whether partial, full or step acquisitions), the
acquirer will record 100% of all assets and liabilities of the acquired business, including goodwill, generally at their fair values;
contingent consideration will be recognized at its fair value on the acquisition date and, for certain arrangements, changes in fair
value will be recognized in earnings until settlement; and acquisition-related transaction and restructuring costs will be expensed
rather than treated as part of the cost of the acquisition. SFAS 141R also establishes disclosure requirements to enable users to
evaluate the nature and financial effects of the business combination. SFAS 141R applies prospectively to business combinations
for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15,
2008. We do not believe that the adoption of SFAS 141R will materially impact our financial statements.
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, asset-backed securities and public corporate debt securities with weighted average
maturities of 286 days at December 31, 2007. Our cash equivalents and investments, net of restricted cash, approximated $90
million and had a related weighted average interest rate of approximately 4.8%. Interest rate fluctuations impact the carrying
value of the portfolio. The fair value of our portfolio of marketable securities would not be significantly affected by either a 10%
increase or decrease in the rates of interest due primarily to the short-term nature of the portfolio. We do not believe that the
future market risks related to the above securities will have a material adverse impact on our financial position, results of
operations or liquidity.
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Item 8. Financial Statements and Supplementary Data.
Our financial statements, schedules and supplementary data, as listed under Item 15, 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.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the
company’s disclosure controls and procedures as of the end of 2007. Based on that evaluation, our Chief Executive Officer and
Chief Financial Officer have concluded that the company’s disclosure controls and procedures were effective as of the end of the
period covered by this report.
There has been no change in our internal control over financial reporting that occurred during the fourth quarter that has