Stamps.com 2003 Annual Report Download - page 47

Download and view the complete annual report

Please find page 47 of the 2003 Stamps.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 77

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77

Table of Contents
STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Fair Value of Financial Instruments
Carrying amounts of certain of the Company’s financial instruments, including cash, cash equivalents, restricted cash, short-term
investments, accounts receivable, notes receivable, accrued payroll, and other accrued liabilities, approximate fair value due to their short
maturities. The fair values of investments are determined using quoted market prices for those securities or similar financial instruments.
Concentration of Risk
The Company’s cash and cash equivalents, restricted cash and investment portfolio is diversified and consists primarily of investment grade
securities. Investments are held with high-quality financial institutions, government and government agencies, and corporations, thereby
reducing credit risk concentrations. From time to time, the Company’s investments held with its financial institutions may exceed Federal
Deposit Insurance Corporation insurance limits. Interest rate fluctuations impact the carrying value of the portfolio.
For the years ended December 31, 2003 and 2002, the Company did not recognize revenue from any one customer that represented 10% of
revenues. The Company recognized revenue from one customer that represented approximately 12% of revenues for the year ended
December 31, 2001.
As of December 31, 2003 and 2002, the Company did not have trade accounts receivable from any one customer that represented 10% of
the total trade accounts receivable balance.
Reclassifications
Certain reclassifications have been made to prior year amounts to conform to current year presentations.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization are computed principally on a straight-
line method over the shorter
of the estimated useful life of the asset or the lease term, ranging from three to five years. Assets acquired under capitalized lease arrangements
are recorded at the present value of the minimum lease payments. The Company has a policy of capitalizing expenditures that materially
increase assets’ useful lives and charges ordinary maintenance and repairs to operations as incurred. When property or equipment is disposed
of, the cost and related accumulated depreciation and amortization are removed from the accounts and any gain or loss is included in
operations.
Trademarks and Patents
Trademarks, patents and other intangibles are included in trademarks and patents in the accompanying balance sheets and are carried at cost
less accumulated amortization. During 2001, the Company acquired intellectual property assets relating to Internet-based postage printing and
management from E-Stamp Corporation for approximately $7.5 million, with an estimated useful life of 7 years.
Amortization is calculated on a straight-line basis over the estimated useful lives of the assets, ranging from 4 to 17 years. During 2003,
2002 and 2001, amortization expense including the amortization of goodwill, trademarks and patents, was approximately $1.1 million,
$1.1 million and $9.6 million, respectively.
F-8