Stamps.com 2015 Annual Report Download - page 76

TABLE OF CONTENTS
STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
marketconditions,whichimpactthediscountrateusedinthefairvaluation.Significantjudgmentwasemployedindeterminingthe
appropriatenessoftheseassumptionsasoftheacquisitiondateandforeachsubsequentreportingperiod.AsofDecember31,2015,the
fairvalueofthecontingentconsiderationwascalculatedbymultiplyingtheexpectedearn-outsharestobedistributedbyourstock
priceatDecember31,2015.
ShipWorks Acquisition
OnAugust29,2014,weacquired100%oftheoutstandingequityofInterapptiveInc.,whichoperatesShipWorks,inacash
transaction.ShipWorks,basedinSt.Louis,Missouri,offersmonthlysubscriptionbasede-commerceshippingsoftwarethatprovides
simple,powerfulandeasytousesolutionsforonlinesellers.ShipWorkssolutionsintegratewithover50popularonlinesalesand
marketplacessystemsincludingeBay,PayPal,Amazon,Yahoo!andothers.ShipWorksoffersmulti-carriershippingoptionsand
featuresincludingsendingemailnotificationstobuyers,updatingonlineorderstatus,generatingreportsandmanymore.Duringthe
fourthquarterof2014,weadjustedthepurchasepriceofShipWorksbyapproximately$69,000.
ThetotalpurchasepriceforShipWorkswasapproximately$22.1millionandwascomprisedofthefollowing(inthousands,
exceptshares):
Fair Value
Cashconsideration $ 21,952
Deferredconsideration  181
Totalpurchaseprice $ 22,133
Thetotalpurchasepriceoftheacquiredcompanywasallocatedtotheassetsacquiredandtheliabilitiesassumedbasedontheir
fairvalues.Wehavemadesignificantestimatesandassumptionsindeterminingtheallocationofthepurchaseprice.Thefollowing
tableistheallocationofthepurchaseprice(inthousands,exceptyears):
Fair Value Fair Value Useful Life
Weighted
Average
Estimated
Useful Life
(In Years)
Cashandcashequivalents $ 803      
Tradeaccountsreceivable  353      
Otherassets  21      
Propertyandequipment  1,091      
Goodwill  16,349      
Identifiableintangibleassets:        
Trademark   $ 200  6  
Developedtechnology    1,700  7  
Non-competeagreement    700  4  
Customerrelationship    2,300  6  
Totalidentifiableintangibleassets  4,900      6
Accruedexpensesandotherliabilities  (1,119)      
Deferredrevenue  (265)      
Totalpurchaseprice $ 22,133      
Goodwillrepresentstheexcessofthefairvalueofconsiderationgivenoverthefairvalueofthetangibleassets,identifiable
intangibleassetsandliabilitiesassumedinabusinesscombinationandthepotentialsynergyofcombiningtheoperationsof
Stamps.comandShipWorks.Weexpecttheentireamountofgoodwillrecordedinthisacquisitionwillbedeductedfortaxpurposes
ratablyovera15yearperiod.Theidentifiedintangibleassetsconsistoftrademarks,developedtechnology,non-competeagreements
andcustomerrelationships.Theestimatedfairvaluesofthetrademarkanddevelopedtechnologyweredeterminedusingthe“relief
fromroyalty”method.Theestimatedfairvalueofthenon-competewasdeterminedusingthe“withandwithout”method.The
estimatedfairvalueofcustomerrelationshipwasdeterminedusingthe“excessearnings”method.Therateutilizedtodiscountnetcash
flowstotheirpresentvalueswasapproximately13%andwasdeterminedafterconsiderationoftheoverallenterpriserateofreturnand
therelativeriskandimportanceoftheassetstothe
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