Stamps.com 2015 Annual Report Download - page 51

TABLE OF CONTENTS
reasonablepossibilitythatalossoradditionallossmayhavebeenincurredforsuchproceedings,wedisclosetheestimateofthe
amountoflossorpossiblerangeofloss,ordisclosethatanestimateoflosscannotbemade,asapplicable.
Promotional Expense
Newmailingandshippingcustomersaretypicallyofferedpromotionalitemsthatareredeemedusingcouponsthatarequalified
forredemptionafteracustomerissuccessfullybilledbeyondaninitialtrialperiod.Weaccountforourpromotionalexpensein
accordancewithAccountingStandardCodification(“ASC”)605-50-25,“Recognition–Vendor’sAccountingforConsiderationGiven
toaCustomer”,byrecognizingaliabilityforpromotionalexpensebasedonestimatedamountsthatwillbeclaimedbycustomers
unlesstheliabilityforpromotionalexpensecannotbereasonableandreliablyestimated.Thisincludesfreepostageandafreedigital
scaleandisexpensedintheperiodinwhichacustomerqualifiesusingestimatedredemptionratesbasedonhistoricaldata.We
periodicallyreviewourhistoricalredemptionratesandadjust,ifnecessary,ourestimatedredemptionratesforfutureperiods.
Promotionalexpense,whichisincludedincostofservice,isincurredascustomersqualifyandtherebymaynotcorrelatedirectlywith
changesinrevenue,astherevenueassociatedwiththeacquiredcustomerisearnedoverthecustomer’slifetime.
Income Taxes
WeaccountforincometaxesinaccordancewithFASBASCTopicNo.740,IncomeTaxes(“ASC740”),whichrequiresthat
deferredtaxassetsandliabilitiesberecognizedusingenactedtaxratesfortheeffectoftemporarydifferencesbetweenthebookandtax
basisofrecordedassetsandliabilities.ASC740alsorequiresthatdeferredtaxassetsbereducedbyavaluationallowanceifitismore
likelythannotthatsomeorallofthenetdeferredtaxassetswillnotberealized.Werecordavaluationallowancetoreduceourgross
deferredtaxassets,whichareprimarilycomprisedofU.S.FederalandStatetaxlosscarry-forwards,totheamountthatismorelikely
thannot(alikelihoodofmorethan50percent)toberealized.Inorderforustorealizeourdeferredtaxassets,wemustbeableto
generatesufficienttaxableincome.Weevaluatetheappropriatenessofourdeferredtaxassetsandrelatedvaluationallowancein
accordancewithASC740basedonallavailablepositiveandnegativeevidence.
Basedonourevaluationofthesefactors,wereducedourvaluationallowancesin2014and2013.Theportioncreditedtothe
incomestatementwasapproximately$13.9millionand$9.7million,respectively.AsofDecember31,2014,wenolongerhaveany
valuationallowanceagainstourgrossdeferredtaxassetsaswebelievewehavemetthemorelikelythannotthresholdthatwewillbe
abletoutilizeourtaxlosscarry-forwardsintheforeseeablefuture.Intheeventweweretodeterminethatwewouldnotbeableto
realizeallorpartofournetdeferredtaxassetsinthefuture,anadjustmenttothedeferredtaxassetsvaluationallowancewouldbe
chargedtoearningsintheperiodinwhichwemakesuchadetermination.Likewise,ifwelaterdeterminethatitismorelikelythannot
thatadditionaldeferredtaxassetswouldberealized,wewouldreversetheapplicableportionofthepreviouslyprovidedvaluation
allowance.
Recently Issued Accounting Pronouncements
InMay2014,theFinancialAccountingStandardsBoard(“FASB”)issuedAccountingStandardsUpdateNo.2014-09,Revenue
fromContractswithCustomers(“ASU2014-09”)anupdatedstandardonrevenuerecognition.ThisASUwillsupersedetherevenue
recognitionrequirementsinAccountingStandardsCodificationTopic605,RevenueRecognition,andmostindustry-specificguidance.
ASU2014-09providesenhancementstothequalityandconsistencyofhowrevenueisreportedwhilealsoimprovingcomparabilityin
thefinancialstatementsofcompaniesreportingusingUSGAAPandInternationalFinancialReportingStandards.Thecoreprincipleof
thenewstandardisforcompaniestorecognizerevenuetodepictthetransferofgoodsorservicestocustomersinamountsthatreflect
theconsiderationtowhichtheCompanyexpectstobeentitledinexchangeforthosegoodsorservices.IndoingsotheCompanymay
berequiredtousemorejudgmentandmakemoreestimatesthanundercurrentauthoritativeguidance.ASU2014-09willbeeffective
fortheCompanyinthefirstquarteroffiscal2017andmaybeappliedonafullretrospectiveormodifiedretrospectiveapproach.The
Companyiscurrentlyevaluatingtheimpacttheadoptionofthisstandardwillhaveonitsconsolidatedfinancialstatements.
InApril2015,theFASBissuedanewstandardsimplifyingthepresentationofdebtissuancecosts.Thenewstandardalignsthe
treatmentofdebtissuancecostswithdebtdiscountsandpremiumsandrequiresdebtissuance
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