Stamps.com 2003 Annual Report Download - page 58

Table of Contents
STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Total adjustments to the 2001 provision related to cost cutting efforts consisting of a charge of $27,000 in restructuring employee severance,
fixed asset write-offs and lease obligations for discontinued office space, and a credit of $1.7 million related to a better-than-expected outcome
on the termination of certain contractual arrangements. During the fiscal year 2003, an additional adjustment of approximately $270,000 was
made to the 2001 provision for the remaining estimated rent and expenses as well as estimated lease termination buy-outs for the unoccupied
facilities.
The calculation of the restructuring costs only includes those costs for which the Company will be unable to recognize any future benefit. In
addition, the calculation of the restructuring costs requires management to make estimates and assumptions that affect the amounts reported in
the consolidated financial statements. Actual results could differ from management’s assumptions and those differences may be material to the
consolidated financial statements.
13. Related Party Transactions
In February 2000, John M. Payne (former Chairman of the Board, Chief Executive Officer and director) purchased 187,000 shares of the
Company’s common stock on the open market for an aggregate purchase price of approximately $6.0 million. Mr. Payne purchased the shares
on margin and the margin account was secured by a pledge of 1,467,500 shares of the Company’s common stock held by Mr. Payne. As of
October 31, 2000, Mr. Payne’s total indebtedness under the margin account was approximately $6.7 million, which amount consists of the
purchase price of the 187,000 shares, accrued interest on the purchase price and other fees and indebtedness incurred by Mr. Payne, less the
proceeds from his sale of the Company’s common stock during the third quarter of 2000.
In April 2000, the Company agreed to guarantee Mr. Payne’s margin account in the event the value of the shares pledged was insufficient
collateral to secure the indebtedness outstanding under the margin account. The guarantee was in the form of a single-purpose line of credit
extended to Mr. Payne which would have a balance due to the Company to the extent the value of the pledged shares is insufficient collateral to
secure indebtedness outstanding under the margin account. This line of credit was secured by all of Mr. Payne’s assets.
Mr. Payne agreed to sell a minimum of 100,000 shares of common stock during each fiscal quarter (beginning the third fiscal quarter of
2000) in order to pay down the indebtedness outstanding under the margin account. Pursuant to this agreement, Mr. Payne sold 7,500 shares at
a price of $4.50 per share and 95,500 shares at a price of $4.3125 per share on August 29, 2000. Mr. Payne also sold 15,000 shares at a price of
$2.94 per share on November 15, 2000 and 85,000 shares at a price of $3.02 per share on November 17, 2000. The sale of these 200,000 shares
during the third and fourth fiscal quarters resulted in aggregate repayment of indebtedness in the amount of approximately $730,000.
F-19
December 31, 2003
Employee severance costs
$
—
$
—
$
—
$
—
Contract exit fees
—
—
—
—
Fixed asset disposals
—
—
—
—
Facility lease expenses
288
(512
)
270
46
Write
-
off of investment in EncrypTix
—
—
—
—
Other
—
—
—
—
Total
$
288
$
512
$
270
$
46