Stamps.com 2007 Annual Report Download - page 42

and public corporate debt securities at December 31, 2007 and 2006. All investments are classified as available for sale and
are recorded at market value using the specific identification method. Realized gains and losses are reflected in other income, net
while unrealized gains and losses are included as a separate component of stockholders’ equity.
Trade Accounts Receivable
Our trade accounts receivable primarily relate to PC Postage Services, PhotoStamps Sales and Branded Insurance provided
to customers prior to billing. Trade accounts receivable, net of allowances for uncollectible accounts of $15,562 and $8,713 as of
December 31, 2007 and 2006, respectively, were approximately $2,519,000 and $2,365,000 as of December 31, 2007 and 2006,
respectively.
We evaluate the collectibility of our accounts receivable based on a combination of factors. If we become aware of a
customer’s inability to meet their financial obligations, an allowance is recorded to reduce the net receivable to the amount
reasonably believed to be collectible from the customer. For all other customers, we recognize allowances for doubtful accounts
based on the length of time the receivables are past due, the current business environment and their historical experience. If the
financial condition of our customers were to deteriorate, resulting in their inability to make payments, additional provisions are
recorded in that period.
Fair Value of Financial Instruments
Carrying amounts of certain of our financial instruments, including cash, cash equivalents, restricted cash, accounts
receivable, notes receivable, accrued payroll, and other accrued liabilities, approximate fair value due
F-40
TABLE OF CONTENTS
STAMPS.COM INC.
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies – (continued)
to their short maturities. The fair values of investments are determined using quoted market prices for those securities or similar
financial instruments.
Concentration of Risk
Our cash, cash equivalents and investments are subject to market risk, primarily interest rate and credit risk. Our investments
are managed by a limited number of outside professional managers within investment guidelines set by us. Such guidelines
include security type, credit quality and maturity and are intended to limit market risk by restricting our investments. From time
to time, our investments held with financial institutions may exceed Federal Deposit Insurance Corporation insurance limits.
Interest rate fluctuations and changes in credit ratings impact the carrying value of the portfolio.
During 2007, 2006 and 2005 we did not recognize revenue from any one customer that represented 10% or more of
revenues.
As of December 31, 2007 and 2006, we did not have trade accounts receivable from any one customer that represented 10%
or more of the total trade accounts receivable balance.
Reclassifications
Certain reclassifications have been made to prior year amounts to conform to current year presentations.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization are computed principally on a straight-line method
over the estimated useful life of the asset, ranging from three to five years. We have a policy of capitalizing expenditures that
materially increase assets’ useful lives and charging ordinary maintenance and repairs to operations as incurred. When property
or equipment is disposed of, the cost and related accumulated depreciation and amortization are removed from the accounts and
any gain or loss is included in operations.
Trademarks and Patents