Stamps.com 2002 Annual Report Download - page 54

Table of Contents
STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Recent Accounting Pronouncements
In June 2001, the the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (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. The adoption of SFAS No. 141 and SFAS No. 142 on January 1, 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 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 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 January 1, 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 December 31, 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.
3.Goodwill and Intangible Assets
Effective January 1, 2002, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” In accordance with SFAS No. 142,
the Company is required to discontinue goodwill amortization. The Company wrote off all of its goodwill in the first quarter of 2001. The
Company’ s other intangible assets, which consist of patents and trademarks with a gross carrying value of $7.8 million and accumulated
amortization of $1.9 million as of December 31, 2002, continue to be amortized over their expected useful lives ranging from 4 to 17 years.
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2003. EDGAR Online, Inc.