Stamps.com 2006 Annual Report Download - page 34

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amount that has a greater than 50% likelihood of being realized upon ultimate settlement. We were required to adopt FIN 48 effective as of
January 1, 2007. We are currently evaluating the effect FIN 48 will have on our financial statements. We do not expect the impact will be
material.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (
Statement 157), which addresses how companies should
measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under generally accepted
accounting principles. Statement 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting
principles and expands disclosures about fair value measurements. Statement 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007 and should be applied prospectively, except in the case of a limited number of financial instruments that
require retrospective application. We are currently evaluating the potential impact of Statement 157 on our financial statements. We do not
expect the impact will be material.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities-including an
amendment of FAS 115” (Statement 159). Statement 159 allows entities to choose, at specified election dates, to measure eligible financial
assets and liabilities at fair value that are not otherwise required to be measured at fair value. If a company elects the fair value option for an
eligible item, changes in that item’s fair value in subsequent reporting periods must be recognized in current earnings. Statement 159 is
effective for fiscal years beginning after November 15, 2007. We are currently evaluating the potential impact of Statement 159 on our
financial statements. We do not expect the impact will be material.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Our exposure to market rate risk for changes in interest rates relates primarily to our investment portfolio. We have not used derivative
financial instruments in our investment portfolio. Our cash equivalents and investments are comprised of money market, U.S. government
obligations and public corporate debt securities with weighted average maturities of 328 days at December 31, 2006. Our cash equivalents and
investments, net of restricted cash, approximated $105 million and had a related weighted average interest rate of approximately 5.3%. Interest
rate fluctuations impact the carrying value of the portfolio. We do not believe that the future market risks related to the above securities will
have a material adverse impact on our financial position, results of operations or liquidity.
Item 8. Financial Statements and Supplementary Data.
Our financial statements, schedules and supplementary data, as listed under Item 15, appear in a separate section of this Report beginning
on page F-1.
Item 9. Changes In and Disagreements with Accountants On Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures.
The company’
s management evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness
of the company’s disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief
Executive Officer and Chief Financial Officer have concluded that the company’s disclosure controls and procedures were effective as of the
end of the period covered by this report.
There has been no change in the company’s internal control over financial reporting that occurred during the fourth fiscal quarter that has
materially affected, or is reasonably likely to material affect, the company’s internal control over financial reporting.
Changes In Internal Controls.
During the fiscal quarter ended December 31, 2006, there has been no change in our internal control over financial reporting (as defined in
Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting.
31