Stamps.com 2008 Annual Report Download - page 52

7. Allowance for Doubtful Accounts
As of December 31, 2008 and 2007, our allowance for doubtful accounts totaled $31,325 and $15,562, respectively.
Increases in our allowance for doubtful accounts totaled $15,763 and $6,849 for 2008 and 2007, respectively. There were no
material write-offs against the allowance for doubtful accounts during 2008 and 2007.
8. Property and Equipment
Property and equipment is summarized as follows (in thousands):
During 2008, 2007 and 2006, depreciation expense was approximately $1.6 million, $2.0 million and $1.8 million,
respectively. During 2008 we disposed of approximately $3.6 million of fully depreciated assets. There were no such disposal in
2007 and 2006.
9. Income Taxes
During 2008 our income tax benefit consists of alternative minimum federal tax and state income tax netted against a tax
benefit relating to the release of a portion of our deferred tax asset valuation allowance. Our effective income tax rate differs
from the statutory income tax rate primarily as a result of the partial release of our valuation allowance as well as our use of
federal net operating losses to offset current federal tax expense. A valuation allowance was originally recorded against our
deferred tax assets, consisting of net operating loss carryforwards and research tax credit carryforwards, as we determined the
realization of these assets did not meet the more likely than not criteria in accordance with SFAS No. 109, “Accounting for
Income Taxes.” During 2008, we reduced our valuation allowance by a total of $6.7 million. Of this amount, $3.0 million related
to the use of our deferred tax assets to offset 2008 income taxes. During 2008, we determined that a full valuation allowance
against our deferred tax assets was not necessary. In making such determination, we considered available positive and negative
evidence including our recent earnings trend and expected continued future taxable income. As a result, we recorded a partial
reversal of our deferred tax valuation allowance during the first quarter of 2008 of $3.7 million to be used to offset future income
taxes. We continue to maintain a valuation allowance for the remainder of our deferred tax assets. The $3.7 million partial
reversal of our valuation allowance and the current tax provision of $885,000 for corporate alternative
2008 2007
Furniture and equipment
$
1,679
$
1,713
Computers and software
13,036
15,799
Leasehold improvements
1,719
1,708
16,434
19,220
Less accumulated depreciation and amortization
(13,348
)
(15,430
)
Property and equipment, net
$
3,086
$
3,790
F-16
TABLE OF CONTENTS
STAMPS.COM INC.
NOTES TO FINANCIAL STATEMENTS
9. Income Taxes – (continued)
minimum federal taxes and state income taxes resulted in an overall tax benefit of $2.8 million. In September 2008, the State of
California passed a new legislation temporarily suspending the use of net operating losses to offset current state income tax
expense. As a result, we incurred approximately $523,000 of additional California state income tax for the year ended December
31, 2008. During 2008, we recorded a current tax provision for corporate alternative minimum federal taxes and state income
taxes of approximately $259,000 and $626,000, respectively.
Our effective tax rate differs from the statutory federal income tax rate primarily as a result of the establishment of a
valuation allowance for the future benefits to be received from the deferred tax assets including net operating loss carryforwards
and research tax credit carryforwards. The tax effect of temporary differences that give rise to a significant portion of the
deferred tax assets and liabilities at December 31, 2008 and 2007 are presented below (in thousands):