Stamps.com 2003 Annual Report Download - page 38

Table of Contents
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Stockholders of Stamps.com Inc.:
We have audited the accompanying balance sheets of Stamps.com Inc. (a Delaware corporation) and subsidiaries as of December 31, 2003 and
2002 and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss) and cash flows for the years
then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
these financial statements based on our audit. The consolidated financial statements of Stamps.com Inc., for the fiscal year ended December 31,
2001, were audited by other auditors who have ceased operations. Those auditors expressed an unqualified opinion on those statements in their
report dated February 7, 2002.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of
Stamps.com Inc. and subsidiaries as of December 31, 2003 and 2002, and the consolidated results of their operations and their cash flows for
the years then ended in conformity with accounting principles generally accepted in the United States.
As discussed in Note 3 to the consolidated financial statements, Stamps.com Inc. changed its method of accounting for purchased goodwill and
other intangible assets in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142 during the first quarter of fiscal
2002. As discussed above, the financial statements of Stamps.com Inc. as of December 31, 2001, and for the year then ended were audited by
other auditors who have ceased operations. As described in Note 3, these financial statements have been updated to include the transitional
disclosures required by SFAS No. 142, “Goodwill and Other Intangible Assets,” which was adopted by the Company as of January 1, 2002.
Our audit procedures with respect to the disclosures in Note 3 for fiscal 2001 included (i) agreeing the previously reported net loss to the
previously issued financial statements and the adjustments to reported net loss representing amortization expense (including any related tax
effects) recognized in those periods related to goodwill that are no longer being amortized to the Company’s underlying records obtained from
management, and (ii) testing the mathematical accuracy of the reconciliation of adjusted net loss to reported net loss, and the related net loss-
per-share amounts. Our audit procedures with respect to the disclosures in Note 3 for fiscal 2001 included (i) agreeing the goodwill and
amortization amounts and the gross intangible assets and accumulated amortization amounts to the Company’s underlying records obtained
from management, and (ii) testing the mathematical accuracy of the tables. In our opinion, the disclosures for fiscal 2001 in Note 3 related to
the transitional disclosures of SFAS No. 142 are appropriate. However, we were not engaged to audit, review, or apply any procedures to the
Company’s financial statements for fiscal 2001 other than with respect to such disclosures and, accordingly, we do not express an opinion or
any other form of assurance on the Company’s fiscal 2001 financial statements taken as a whole.
/s/ ERNST & YOUNG LLP
Los Angeles, California
January 27, 2004
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