Stamps.com 2015 Annual Report Download - page 83

TABLE OF CONTENTS
STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
  Fair Value Measurement at Reporting Date Using
Description
December 31,
2014
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Contingentconsideration–current $ 9,225 $ — $ — $ 9,225
Contingentconsideration–long-term  15,790  —  —  15,790
Total $ 25,015 $ — $ — $ 25,015
Thefollowingtablerepresentsareconciliationofcontingentconsiderationobligationmeasuredonarecurringbasisusing
significantunobservableinputs(level3)asofDecember31,2014andthentransferredtoquotedpricesinactivemarkets(level1)asof
December31,2015(inthousands):
2015
  
Beginningofyearbalance $ 25,015
Contingentconsiderationdistribution  (9,225)
Contingentconsiderationcharges(1)  46,088
Contingentconsiderationcompensationexpense(1)  1,331
Endofyearbalance $ 63,209
(1) Thisamountrepresentsfairvalueadjustmentduringtheyeartocontingentconsiderationrecordedassociatedwiththeacquisition
ofShipStation.The$46.1millioncontingentconsiderationchargeisrecordedasaseparatelineiteminourconsolidatedstatement
ofincome.The$1.3millioncontingentconsiderationchargerelatingtocertainemployeesisrecordedingeneraland
administrativeexpenseinoperatingexpense.SeeNote3–“Acquisitions”forfurtherdescription.AtDecember31,2015,the
contingentconsiderationobligationwastransferredfromlevel3tolevel1.
7. Debt
OnNovember18,2015,weenteredintoacreditagreementwithagroupofbanks,whichprovidesforatermloanof$82.5million
andarevolvingcreditfacilitywithamaximumborrowingof$82.5million(collectively,the“CreditAgreement).TheCredit
Agreementissecuredbysubstantiallyallofourassets.OurCreditAgreementmaturesonNovember18,2020.Inconnectionwith
enteringintotheCreditAgreement,weincurredapproximately$1.8millionindebtissuancecostswhichwererecordedasdebt
discountandarebeingaccretedasinterestexpenseoverthelifeoftheCreditAgreement.Interestexpenseassociatedwiththedebit
issuancecostsfortheyearendedDecember31,2015wasapproximately$31,000.
AsofDecember31,2015ouroutstandingdebtundertheCreditAgreement,grossofdebtissuancecosts,wasapproximately$81.5
millionunderourtermloanandapproximately$82.0millionunderourrevolvingcreditfacility.Becausewehavealetterofcreditof
approximately$500,000relatingtoafacilitylease,wedonothaveanyavailableorunusedborrowingsundertherevolvingcredit
facility.
BorrowingsunderthetermloanarepayableinquarterlyinstallmentswhichbeganonDecember31,2015.Wepayinterestonour
CreditAgreementequaltotheLondonInterbankOfferedRateplusanapplicablemargin,between1.25%to2.00%,baseduponcertain
financialmeasures.AsofDecember31,2015,ourapplicablemarginwas1.5%andtheinterestrateonouroutstandingloanwas
approximately1.86%.WearesubjecttocertaincustomaryquarterlyfinancialcovenantsunderourCreditAgreementsuchasa
maximumtotalleverageratioandaminimumfixedchargecoverageratio.Further,theCreditAgreementincludesnegativecovenants,
subjecttoexceptions,restrictingorlimitingourabilityandtheabilityofoursubsidiariesto,amongotherthings,incuradditional
indebtedness,grantliens,repurchasestock,paydividendsandengageincertaininvestment,acquisitionanddispositiontransactions.As
ofDecember31,2015,wewereincompliancewiththecovenantsoftheCreditAgreement.
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