Stamps.com 2004 Annual Report Download - page 52

F-17
STAMPS.COM INC.
NOTES TO FINANCIAL STATEMENTS (continued)
12. Litigation Settlement
In July 2004, the Company entered into an agreement with eBay Inc. (“eBay”) to settle litigation filed by
the Company in June 2003. Under this agreement, eBay paid the Company a one-time amount of approximately
$1.4 million recognized in the accompanying statement of operations as other income. In addition, the Company
also recognized the related litigation expenses related to the eBay matter that was contingent upon the outcome of
the settlement in the amount of $1.4 million as a component of general and administrative expenses. Furthermore,
eBay agreed to a three year licensing agreement for the use of software and intellectual property owned by
Stamps.com.
13. Restructuring
In October 2000, the Company’ s management approved and implemented a restructuring plan as part of a move to
streamline operations, reduce infrastructure and overhead and eliminate excess and duplicative facilities. There were
no restructuring charges for the years ended December 31, 2004, 2003 and 2002. A summary of the restructuring
provision and accrual activity is set forth below (in thousands):
2001
Provision Utilized Adjustment
Remaining
Provision
December 31, 2002
Facility lease expenses................................................... 2,617 (2,329)
—
288
Total.......................................................................... $ 2,617 $ (2,329) $
—
$288
December 31, 2003
Facility lease expenses................................................... 288 (512) 270 46
Total.......................................................................... $ 288 $ 512 $ 270 $ 46
December 31, 2004
Facility lease expenses................................................... 46 (46)
—
—
Total.......................................................................... $ 46 $ (46) $
—
$
—
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.
14. Employee Stock Plans
Stock Incentive Plans
The 1999 Stock Incentive Plan (the “1999 Plan”) serves as the successor to the 1998 Stock Plan (the
“Predecessor Plan”). The 1999 Plan became effective in June 1999. At that time, all outstanding options under the
Predecessor Plan were transferred to the 1999 Plan, and no further option grants can be made under the Predecessor
Plan. All outstanding options under the Predecessor Plan continue to be governed by the terms and conditions of the
existing option agreements for those grants, unless the Company’ s compensation committee decides to extend one
or more features of the 1999 Plan to those options.
As of December 31, 2004, the total number of shares authorized for issuance under the 1999 Plan is
approximately 9,028,295 which amount includes an automatic annual increase to the share reserve of 3% of the
Company’ s outstanding common shares on the last trading day in December. The automatic increase on January 1,
2001 was 744,814 based upon 24,827,114 shares outstanding on the last day of 2000. The automatic increase on
January 1, 2002 was 760,841 based upon 25,361,357 shares outstanding on the last day of 2001. The automatic
increase on January 1, 2003 was 667,327 based upon 22,244,235 shares outstanding on the last day of 2002. The
automatic increase on January 1, 2004 was 661,921 based upon 22,064,044 shares outstanding on the last day of
2003
In no event will this annual increase exceed 782,358 shares. In addition, no participant in the 1999 Plan
may be granted stock options or direct stock issuances for more than 562,500 shares of common stock in total in any
calendar year.