Stamps.com 2008 Annual Report Download - page 43

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STAMPS.COM INC.
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies – (continued)
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 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 2008, 2007, 2006 and 2005 we did not recognize revenue from any one customer that represented 10% or more of
revenues.
As of December 31, 2008 and 2007, we did not have trade accounts receivable from any one customer that represented 10%
or more of the total trade accounts receivable balance.
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
Acquired trademarks, patents and other intangibles are included in intangible assets, net in the accompanying balance sheets
and are carried at cost less accumulated amortization. Cost associated with internally developed intangible assets is typically
expensed as incurred as research and development costs.
Amortization is calculated on a straight-line basis over the estimated useful lives of the assets, ranging from 4 to 17 years.
During 2008, 2007 and 2006, amortization expense including the amortization of trademarks and patents, was approximately
$367,000, $1.1 million and $1.1 million, respectively.
Impairment of Long-Lived Assets and Intangibles
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
Statement of Financial Accounting Standards (SFAS) No. 142 requires that goodwill and intangible assets that have
indefinite useful lives not be amortized but, instead, tested at least annually for impairment while intangible assets that have
finite useful lives continue to be amortized over their respective useful lives.
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