Stamps.com 2002 Annual Report Download - page 30

Table of Contents
Research and Development. Research and development expenses principally consist of compensation for personnel involved in the
development of the Internet Postage and, in 2001, enterprise shipping service and expenditures for consulting services and third-party software.
Research and development expenses for the year ended December31, 2002 decreased to $4.8million from $12.6million for the year ended
December31, 2001, a decrease of 61.9%. The decrease in research and development expenses in 2002 is primarily due to increased cost control
efforts and the reduction in headcount during 2001.
Sales and Marketing. Sales and marketing expenses principally consist of costs associated with strategic relationships, advertising, and
compensation and related expenses for personnel engaged in marketing and business development activities. Sales and marketing expenses
decreased from $9.7million for the year ended December31, 2001, to $2.5million for the year ended December31, 2002, a decrease of 74.2%.
The decrease in sales and marketing expenses in 2002 resulted from a reduction in sales and marketing personnel in February and August of
2001, the termination of fixed-cost marketing deals during 2001, as well as a smaller and more focused spend of discretionary marketing dollars
on programs that provide a higher return on investment.
General and Administrative. General and administrative expenses principally consist of compensation and related costs for executive and
administrative personnel, fees for legal and other professional services, depreciation of equipment and software used for general corporate
purposes and amortization of goodwill and deferred compensation. General and administrative expenses for the years ended December31, 2002
and 2001 were $15.5million and $196.7million, respectively. The decrease in 2002 is due to cost control efforts and the reduction in headcount
during 2001, and to a non-cash charge of $163.6million in the first quarter of 2001 to reduce goodwill and other intangibles associated with the
purchase of iShip in order to reflect the present value of future cash flows, net of estimated transaction costs.
Restructuring Charge . In October 2000, we began our restructuring to more effectively focus on core business opportunities in the postage and
shipping industries. As a part of that restructuring, we eliminated approximately 85% of the workforce through 3rounds of layoffs, terminated
our fixed-cost marketing agreements and disposed of excess assets. The resulting restructuring charge for the year ended December31, 2001
was $26.0million. This charge consists primarily of employee severance, reserves established for exiting contractual arrangements and leases,
and property and equipment write-offs.
Interest Income (Expense), Net. Interest income (expense), net consists of income from cash equivalents and investments, net of interest
expense related to financing obligations. Net interest income for the years ended December31, 2002 and 2001 were $4.9million and
$10.1million, respectively. This decrease is due to the continued decline of interest rates in 2002 and a reduction of invested capital as a result
of share repurchases during 2002.
Years Ended December 31, 2001 and 2000
Revenue. Revenue was derived primarily from three sources: (1)service fees charged to customers for the ability to print postage directly from
their printer, (2)professional contract revenue, received from Mail BoxesEtc. USA, Inc., for shipping tools used by Mail BoxesEtc. USA, Inc.
franchise locations and (3)on-line store revenue, comprised of fees paid for customer referrals, revenue share on sales to referred customers and
slotting fees.
Total revenue increased from $15.2million to $19.4million for the years ended December31, 2000 and 2001, respectively. The increase in
revenue is primarily due to service fee price increases which began in November of 2000. The professional contract revenue in 2000 and 2001
relates to the Mail BoxesEtc. USA, Inc. agreement that was initiated in 2000 and terminated in January 2001. Other revenue consists primarily
of bounties and commissions on sales of products to our customers by third parties. The bounty and commission agreements were also initiated
in 2000 and continued through 2001.
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2003. EDGAR Online, Inc.