Stamps.com 2002 Annual Report Download - page 33

Table of Contents
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. The adoption of SFAS No.141 and SFAS No.142 on January1, 2002, did not have a material impact on the financial position or
results of operations of the Company.
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 December15, 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 DisposedOf” , and portions of Accounting Principles
Bulletin Opinion30, “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 adoption of the provision of this Standard on January1, 2002 did not have a material
impact on the Company’ s financial position or operating results.
In June 2002, the FASB issued SFAS No.146, “Accounting for Costs Associated with Exit or Disposal Activities”, effective for exit or disposal
activities that are initiated after December31, 2002. SFAS No.146 addresses financial accounting and reporting for costs associated with exit or
disposal activities and nullifies Emerging Issues Task Force Issue No.94-3, “Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)” and requires that a liability for a cost associated with
an exit or disposal activity be recognized when the liability is incurred and not at the date of an entity’ s commitment to an exit plan. The
Company expects that the adoption of SFAS No.146 will not have a material impact on its financial position or its results of operations.
In December 2002, the FASB issued SFAS No.148, “Accounting for Stock-Based Compensation—Transition and Disclosure, an Amendment
of FASB Statement No.123.” This statement amends SFAS No.123, “Accounting for Stock-Based Compensation,” to provide alternative
methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition,
this Statement amends the disclosure requirement of SFAS No.123 to require prominent disclosure in both annual and interim financial
statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The
Company adopted this statement in December 2002 and its adoption did not have a material impact on our financial position, results of
operations or cash flows.
Critical Accounting Policies
General .The Company’ s discussion and analysis of its financial condition and results of operations are based on the Company’ s consolidated
financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The
preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its
estimates, including those related to patents, restructuring, contingencies and litigation. The Company bases its estimates on historical
experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions.
The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of
its consolidated financial statements.
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2003. EDGAR Online, Inc.