Stamps.com 2015 Annual Report Download - page 77
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STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
generationoffuturecashflows.Trademark,developedtechnology,non-competeandcustomerrelationshipisamortizedonastraight-
linebasisovertheirestimatedusefullives.Weexpecttheamortizationofacquiredintangibleswillbeapproximately$200,000per
quarterfortheremainingestimatedusefullives.
Endicia Acquisition
OnMarch22,2015weenteredintoaStockPurchaseAgreement(“StockPurchaseAgreement”)withPSISystems,Inc.,a
Californiacorporationd/b/aEndicia(“Endicia”),andNewellRubbermaidInc.,aDelawarecorporation(“Newell”).Endicia,basedin
PaloAlto,California,isaleadingproviderofhighvolumeshippingtechnologiesandsolutionsforshippingwiththeUSPS.TheStock
PurchaseAgreementprovidesforourpurchaseofalloftheissuedandoutstandingsharesofcommonstockofEndiciafromawholly-
ownedindirectsubsidiaryofNewell(“Transaction”)foranaggregatepurchasepriceof$215millionincash.Thepurchasepricewas
subjecttoadjustmentforchangesinEndicia’snetworkingcapitalasofthedateoftheclosingoftheTransactionandcertain
transactionexpensesandclosingcashadjustments.Afterreceivingregulatoryclearance,theTransactionwasclosedonNovember18,
2015.
AspartofthefundingofouracquisitionofEndicia,weenteredintoacreditagreementwithagroupofbanksonNovember18,
2015,whichprovidesforatermloanof$82.5millionandarevolvingcreditfacilitywithamaximumborrowingof$82.5million
(collectively,the“CreditAgreement”)tofundouracquisitionofEndicia.TheCreditAgreementissecuredbysubstantiallyallofour
assets.Wefundedouracquisitionwithcashof$56.5millionanddebtfromourCreditAgreementof$164.5million,totaling$221.0
million.The$221.0millionconsistsofthefollowing:1)purchasepriceof$214.2million,2)$1.5millionofdebtissuancecostsand3)
thetransferofEndicia’sendingcashbalanceonNovember17,2015of$5.3million.Totaldebtissuancecostsof$1.8million,which
includes$300thousandofcostsincurredpriortoclosing,wererecordedasdebtdiscountandarebeingaccretedasinterestexpense
overthelifeoftheCreditAgreement.OurCreditAgreementmaturesonNovember18,2020.AsofDecember31,2015our
outstandingdebtundertherevolvingcreditfacilitywasapproximately$82.0million.AsofDecember31,2015ouroutstandingdebt
undertheCreditAgreement,grossofdebtissuancecosts,wasapproximately$81.5millionunderthetermloanandapproximately
$82.0millionundertherevolvingcreditfacility.Becausewehavealetterofcreditofapproximately$500,000relatingtoafacility
lease,wedonothaveanyavailableorunusedborrowingsundertherevolvingcreditfacility.
SeeNote 7 – “Debt” inourNotestoConsolidatedFinancialStatementsforfurtherdiscussionofourdebt.
ThetotalpurchasepricefortheEndiciaacquisitionwasapproximately$214million,netofa$835,000networkingcapital
adjustment.Thetotalestimatedpurchasepriceoftheacquiredcompanyisallocatedtotheassetsacquiredandtheliabilitiesassumed
basedontheirfairvalues.Wehavemadesignificantestimatesandassumptionsindeterminingtheallocationofthepurchaseprice.The
preliminaryallocationofpurchaseconsiderationissubjecttochangebasedonfinalizingthenetworkingcapitalasofthedateof
acquisition.Thefollowingtableistheallocationofthepurchaseprice(inthousands,exceptyears):
Fair Value
Fair
Value Useful Life
Weighted
Average
Estimated
Useful Life
(In Years)
Tradeaccountsreceivable $ 10,247
Otherassets 771
Propertyandequipment 2,798
Goodwill 130,914
Identifiableintangibleassets:
Tradename $ 10,900 Indefinite
Developedtechnology 26,100 9
Customerrelationship 43,200 6
Totalidentifiableintangibleassets 80,200 7
Accruedexpensesandotherliabilities (9,709)
Deferredrevenue (1,056)
Totalpurchaseprice $ 214,165
F-18