Stamps.com 2004 Annual Report Download - page 28

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$14.5 million for the year ended December 31, 2003, a decrease of 6.5%. As a percentage of total revenue, general
and administrative expense decreased 27 percentage points from 95% in fiscal 2002 to 68% in fiscal 2003. The
decrease was primarily due to a reduction in depreciation of fixed assets.
Other Income, Net., net consists of income from cash equivalents and investments, net of interest expense
related to financing obligations. Net interest income for the years ended December 31, 2002 and 2003 were $4.9
million and $3.3 million, respectively. As a percentage of total revenue, interest income, net decreased 14
percentage points from 30% in fiscal 2002 to 16% in fiscal 2003. This decrease was primarily due to lower invested
balances in cash equivalents and investments as well as overall lower interest rates year over year.
Liquidity and Capital Resources
As of December 31, 2004 and 2003, we had approximately $87.2 million and $162.8 million in cash,
restricted cash and short-term and long-term investments, respectively. We invest available funds in short and long
term money market funds, commercial paper, corporate notes and municipal securities and do not engage in hedging
or speculative activities.
In November 2003, we entered into a facility lease agreement commencing on March 2004 for our new
corporate headquarters with aggregate lease payments of approximately $4.0 million through March 2010.
The following table is a schedule of our contractual obligations and commercial commitments which is
comprised of the future minimum lease payments under operating leases at December 31, 2004 (in thousands):
Operating
Years ended:
2005....................................................................................... $ 607
2006....................................................................................... 632
2007....................................................................................... 694
2008....................................................................................... 751
2009....................................................................................... 794
Thereafter.............................................................................. 134
$3,612
In July 2004, the Board authorized a fifth stock repurchase program for a new 12 month period,
superseding previous authorizations. During previous repurchase programs, between April 2002 and May 2003, we
repurchased approximately 3.2 million shares (6.3 million shares prior to the Company’ s 1 for 2 reverse split in May
2004)—a reduction of approximately 12% of our shares outstanding balance from the end of April 2002 when we
began the repurchase programs. In addition, in May 2002, the Company received approximately 0.7 million shares
(1.4 million shares prior to the reverse split) of the Company’ s common stock from John Payne, the former CEO of
the Company, as payment in full of a promissory note executed in November 2000 between Mr. Payne and the
Company. The Company retired those shares in the quarter ended September 30, 2002, and this resulted in an
additional approximately 3% reduction in the shares outstanding balance from the balance at the end of April 2002.
The Company will consider repurchasing shares of its common stock throughout the current 12 month repurchase
program by evaluating such factors as the price of the stock, the daily trading volume, the availability of large blocks
of stock, and any additional constraints it might have because of material inside information it may possess.
In January 2004, our Board of Directors declared a return of capital cash dividend of $1.75 per share, to
stockholders of record as of the close of business on February 9, 2004, which was paid on February 23, 2004. Based
on 45,045,514 (22,522,757 shares after the 1:2 reverse split in May 2004) common shares outstanding, less treasury
stock of approximately 648,000 (324,000 shares after the 1:2 reverse split) on the date of record, February 9, 2004,
the total cash dividend was approximately $78 million.
Net cash provided by operating activities was $3.4 million for the year ended December 31, 2004. Net cash
used in operating activities was $5.5 million for the year ended December 31, 2003. The decrease in net cash used in
operating activities resulted primarily from the decrease in legal expenditures and by increased revenues and
expanding gross margins and operating cash flow.