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Table of Contents
STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
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 $8.9 million and $7.8 million
and accumulated amortization of $3.0 million and $1.9 million as of December 31, 2003 and 2002, respectively, continue to be amortized over
their expected useful lives ranging from 4 to 17 years.
Aggregate amortization expense on patents and trademarks was approximately $1.1 million, $1.1 million, and $751,000 for the three years
ended December 31, 2003, 2002 and 2001. Amortization expense is expected to be approximately $1.1 million in each of the next five fiscal
years.
The following table presents net loss on a comparable basis, after adjustment for goodwill amortization (in thousands, except per share
amounts):
4. Acquisition and Investment in Subsidiaries
On March 7, 2000, the Company completed the acquisition of iShip.com, Inc., a development stage enterprise developing Internet-based
shipping technology. In connection with the acquisition, approximately 5.6 million shares of Stamps.com common stock were issued in
exchange for all outstanding iShip.com, Inc. stock. An additional 1.6 million shares of Stamps.com common stock were reserved for issuance
upon exercise of options and warrants assumed in the transaction.
The acquisition was accounted for as a purchase in accordance with the provisions of APB No. 16. Under the purchase method of
accounting, the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of
acquisition. The Company recorded intangible assets of $222.4 million and deferred compensation of $24.7 million, which was to be amortized
over periods ranging from three to four years, except for in-process research and development which was written off immediately after the
acquisition, which is included in research and development expense in the accompanying statements of operations. Results of operations for
iShip.com, Inc. have been included with those of the Company for periods subsequent to the acquisition date.
F-12
Years Ended December 31,
2003 2002 2001
Reported net loss
$
(9,327
)
$
(6,847
)
$
(209,573
)
Add back: goodwill amortization
—
—
8,816
Adjusted net loss
$
(9,327
)
$
(6,847
)
$
(200,757
)
Basic and diluted loss per share
As reported
(0.21
)
(0.14
)
(4.14
)
As adjusted
(0.21
)
(0.14
)
(3.96
)