form10k.htm

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of

Stamps.com Inc. and Subsidiary

We have audited the accompanying consolidated balance sheets of Stamps.com Inc. and Subsidiary as of December 31, 2012 and 2011, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Stamps.com Inc. and Subsidiary at December 31, 2012 and 2011, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Stamps.com Inc. and Subsidiary’s internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 15, 2013 expressed an unqualified opinion thereon.

	/s/ ERNST & YOUNG LLP

Los Angeles, California
March 15, 2013

F-1

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

	December 31,
	2012			2011

Assets
Current assets:
Cash and cash equivalents	$	29,576		$	54,087
Restricted cash		—			500
Short-term investments		6,323			1,397
Accounts receivable, net		14,432			10,466
Other current assets		5,602			5,476
Total current assets		55,933			71,926

Property and equipment, net		28,631			2,165
Intangible assets, net		1,262			837
Long-term investments		10,720			13,379
Deferred income taxes		30,549			16,125
Other assets		3,757			3,548
Total assets	$	130,852		$	107,980

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	16,366		$	12,075
Deferred revenue		1,532			1,898
Total current liabilities		17,898			13,973

Commitments and contingencies

Stockholders’ equity:
Common stock, $.001 par value Authorized shares: 47,500 in 2012 and 2011 Issued shares: 27,472 in 2012 and 26,856 in 2011 Outstanding shares: 15,319 in 2012 and 16,163 in 2011		50			49
Additional paid-in capital		649,694			637,483
Treasury stock, at cost, 12,153 shares in 2012 and 10,693 shares in 2011		(155,260	)		(123,472	)
Accumulated deficit		(381,781	)		(420,338	)
Accumulated other comprehensive income		251			285
Total stockholders’ equity		112,954			94,007
Total liabilities and stockholders’ equity	$	130,852		$	107,980

The accompanying notes are an integral part of these consolidated financial statements.

F-2

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

	Year Ended December 31,
	2012			2011			2010
Revenues:
Service	$	88,173		$	75,535		$	64,607
Product		14,710			13,465			11,725
Insurance		7,120			4,321			2,023
PhotoStamps		5,651			8,258			7,162
Other		7			6			27
Total revenues		115,661			101,585			85,544
Cost of revenues:
Service		15,720			14,720			13,282
Product		5,435			4,910			4,337
Insurance		2,334			1,506			641
PhotoStamps		4,267			5,076			5,424
Total cost of revenues		27,756			26,212			23,684
Gross profit		87,905			75,373			61,860
Operating expenses:
Sales and marketing		38,755			34,569			31,174
Research and development		10,243			9,395			9,420
General and administrative		14,750			14,181			14,590
Legal settlements		—			—			5,211
Total operating expenses		63,748			58,145			60,395
Income from operations		24,157			17,228			1,465
Non-operating asset write-off		—			—			(634	)
Interest income and other income, net		541			562			756
Income before taxes		24,698			17,790			1,587
Benefit for income taxes		(13,859	)		(8,475	)		(3,945	)
Net income	$	38,557		$	26,265		$	5,532
Net income per share:
Basic	$	2.40		$	1.78		$	0.38
Diluted	$	2.30		$	1.73		$	0.38
Weighted average shares outstanding :
Basic		16,079			14,767			14,529
Diluted		16,793			15,168			14,685

The accompanying notes are an integral part of these consolidated financial statements.

F-3

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	Year Ended December 31,
	2012			2011			2010

Net income	$	38,557		$	26,265		$	5,532
Other comprehensive income:
Unrealized (loss) gain on investments		(34	)		(138	)		629
Comprehensive income	$	38,523		$	26,127		$	6,161

F-4

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

	Common Stock
	Shares			Amount		Additional Paid-in Capital			Treasury Stock at Cost			Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Total
Balance at December 31, 2009		15,681		$	47	$	630,322		$	(104,344	)	$	(450,214	)	$	(206	)	$	75,605
Net income		—			—		—			—			5,532			—			5,532
Unrealized gain on investments		—			—		—			—			—			629			629
Stock-based compensation expense		—			—		2,840			—			—			—			2,840
Return of capital		—			—		(27,023	)		—			—			—			(27,023	)
Dividend		—			—		—			—			(1,921	)		—			(1,921	)
Exercise of stock options		280			—		2,024			—			—			—			2,024
Shares issued under the ESPP		48			—		359			—			—			—			359
Stock repurchase		(1,519	)		—		—			(13,807	)		—			—			(13,807	)
Balance at December 31, 2010		14,490		$	47	$	608,522		$	(118,151	)	$	(446,603	)	$	423		$	44,238
Net income		—			—		—			—			26,265			—			26,265
Unrealized loss on investments		—			—		—			—			—			(138	)		(138	)
Stock-based compensation expense		—			—		3,419			—			—			—			3,419
Exercise of stock options		2,043			2		25,036			—			—			—			25,038
Shares issued under the ESPP		56			—		506			—			—			—			506
Stock repurchase		(426	)		—		—			(5,321	)		—			—			(5,321	)
Balance at December 31, 2011		16,163		$	49	$	637,483		$	(123,472	)	$	(420,338	)	$	285		$	94,007
Net income		—			—		—			—			38,557			—			38,557
Unrealized loss on investments		—			—		—			—			—			(34	)		(34	)
Stock-based compensation expense		—			—		3,991			—			—			—			3,991
Exercise of stock options		560			1		7,305			—			—			—			7,306
Shares issued under the ESPP		56			—		915			—			—			—			915
Stock repurchase		(1,460	)		—		—			(31,788	)		—			—			(31,788	)
Balance at December 31, 2012		15,319		$	50	$	649,694		$	(155,260	)	$	(381,781	)	$	251		$	112,954

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended December 31,
	2012			2011			2010
Operating activities:
Net income	$	38,557		$	26,265		$	5,532
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,649			885			894
Non-operating asset write-off		—			—			634
Stock-based compensation expense		3,991			3,419			2,840
Deferred income taxes		(14,424	)		(8,475	)		(3,979	)
Changes in operating assets and liabilities:
Accounts receivable		(3,966	)		(5,598	)		(501	)
Other current assets		110			(1,461	)		(727	)
Other assets		(209	)		(517	)		556
Deferred revenue		(366	)		(2,295	)		123
Accounts payable and accrued expenses		1,948			3,064			(572	)
Net cash provided by operating activities		27,290			15,287			4,800
Investing activities:
Sale of short-term investments		1,621			10,831			4,835
Purchase of short-term investments		(6,473	)		(8	)		(14,776	)
Sale of long-term investments		8,254			3,473			19,506
Purchase of long-term investments		(5,703	)		(1,982	)		(9,984	)
Release (purchase) of restricted cash		500			(500	)		554
Acquisition of property, equipment and intangibles		(26,481	)		(1,308	)		(1,507	)
Net cash (used in) provided by investing activities		(28,282	)		10,506			(1,372	)
Financing activities:
Dividend payment		—			—			(1,921	)
Return of capital		—			—			(27,023	)
Proceeds from exercise of stock options		7,306			25,038			2,024
Issuance of common stock under ESPP		915			506			359
Repurchase of common stock		(31,740	)		(5,321	)		(13,807	)
Net cash (used in) provided by financing activities		(23,519	)		20,223			(40,368	)
Net (decrease) increase in cash and cash equivalents		(24,511	)		46,016			(36,940	)
Cash and cash equivalents at beginning of period		54,087			8,071			45,011
Cash and cash equivalents at end of period	$	29,576		$	54,087		$	8,071

Supplemental cash flow information:
Income taxes paid during the period	$	221		$	124		$	199
Capital expenditure accrued but not paid at period end	$	2,294			—			—
Treasury stock accrued but not paid at period end	$	49			—			—

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	Description of Business

Stamps.com Inc. and Subsidiary (“the Company” or “we”) are the leading provider of Internet-based postage solutions. Our customers use our service to mail and ship a variety of mail pieces, including postcards, envelopes, flats and packages, using a wide range of United States Postal Service (the “USPS”) mail classes, including First Class Mail®, Priority Mail®, Express Mail®, Media Mail®, Parcel Post®, and others. Our customers include individuals, small businesses, home offices, medium-size businesses and large enterprises, and within these segments we target both mailers and shippers. We were the first ever USPS-licensed vendor to offer PC Postage® in a software-only business model in 1999.

2.	Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Stamps.com Inc. and PhotoStamps Inc. In October 2009, we formed PhotoStamps Inc., a wholly-owned subsidiary, for the purpose of managing our retail gift card operations. Because 100% of the voting control is held by us, we have consolidated PhotoStamps Inc. in the accompanying consolidated financial statements. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates and Risk Management

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates, and such differences may be material to the financial statements. Examples include estimates of loss contingencies, promotional coupon redemptions, the number of PhotoStamps retail boxes that will not be redeemed, deferred income taxes and estimates regarding the useful lives of our building, patents and other amortizable intangible assets.

Contingencies and Litigation

We are subject to various routine litigation matters as a claimant and a defendant. We record any amounts recovered in these matters when received. We record liabilities for claims against us when the loss is probable and estimable. Amounts recorded are based on reviews by outside counsel, in-house counsel and management. Actual results could differ from estimates.

Cash Equivalents and Investments

We consider all highly liquid investments with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents.

Our cash equivalents, restricted cash and investments consisted of money market funds, U.S. government obligations, asset-backed securities and public corporate debt securities at December 31, 2012 and 2011. All investments are classified as available for sale and are recorded at market value using the specific identification method. Realized gains and losses are reflected in interest and other income, net while unrealized gains and losses are included as a separate component of stockholders' equity.

F-7

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Accounts Receivable

Our accounts receivable relate to PC Postage services, PhotoStamps sales, branded insurance provided to customers prior to billing and other receivables. Accounts receivable are recorded at the invoiced amount, net of allowances for uncollectible accounts of approximately $239,000 and $117,000 as of December 31, 2012 and 2011, respectively, and were $14.4 million and $10.5 million as of December 31, 2012 and 2011, respectively.

We evaluate the collectability of our accounts receivable based on a combination of factors. If we become aware of a customer’s inability to meet its financial obligations, an allowance is recorded to reduce the net receivable to the amount reasonably believed to be collectible from the customer. For all other customers, we recognize allowances for doubtful accounts based on the length of time the receivables are past due, the current business environment and our historical experience. If the financial condition of our customers deteriorates, resulting in their inability to make payments, additional provisions are recorded in that period. Accounts receivable are written off against the allowance for uncollectible accounts when we determine amounts are no longer collectible.

Fair Value of Financial Instruments

Carrying amounts of certain of our financial instruments, including cash, cash equivalents, restricted cash, accounts receivable and accounts payable, approximate fair value due to their short maturities. The fair values of investments are determined using quoted market prices for those securities or similar financial instruments.

Concentration of Risk

Our cash, restricted cash, cash equivalents and investments are subject to market risk, primarily interest rate and credit risk. Our investments are managed by a limited number of outside professional managers within investment guidelines set by us. Such guidelines include security type, credit quality and maturity and are intended to limit market risk by restricting our investments. From time to time, our investments held with financial institutions may exceed Federal Deposit Insurance Corporation insurance limits. Interest rate fluctuations and changes in credit ratings impact the carrying value of our portfolio.

During 2012, 2011 and 2010, we did not recognize revenue from any one customer that represented 10% or more of revenues.

We do not have any customers representing 10% or more of total accounts receivable as of December 31, 2012 and 2011, respectively. We have accounts receivable from one partner that represented approximately 40% and 42% of the total accounts receivable balance as of December 31, 2012 and 2011, respectively.

Inventories

Inventories consist of finished products sold through our supplies store and are accounted for using the lower of cost (first-in, first-out method) or market. Inventories reported as a component of other current assets in 2012 and 2011 were $3.4 million and $2.2 million, respectively.

Property and Equipment

We account for property and equipment at cost less accumulated depreciation and amortization. We compute depreciation using the straight-line method over the estimated useful life of the asset, generally three to five years for furniture, fixtures and equipment and ten to forty years for building and building improvements. We have a policy of capitalizing expenditures that materially increase assets’ useful lives and charging ordinary maintenance and repairs to operations as incurred. When property or equipment is disposed of, the cost and related accumulated depreciation and amortization are removed from the accounts, and any gain or loss is included in operations.

F-8

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

On January 23, 2012, we completed the purchase of our new corporate headquarters in El Segundo, California, for an aggregate purchase price of $13.4 million of which approximately $7.2 million was allocated to land value and $5.5 million was allocated to building value. The purchase was accounted for as a business combination. The building is being depreciated on a straight-line basis over the estimated useful life of 40 years; the land is an asset that does not get depreciated. As a result of the purchase we also acquired existing leases of building tenants, and $700,000 of the initial purchase price was allocated to lease-in-place intangible assets and is being amortized over the remaining actual lease terms which are as long as 5.5 years.

Trademarks, Patents and Intangible Assets

Acquired trademarks, patents and other intangibles are included in intangible assets, net in the accompanying consolidated balance sheets and are carried at cost less accumulated amortization. Cost associated with internally developed intangible assets is typically expensed as incurred as research and development costs.

Amortization is calculated on a straight-line basis over the estimated useful lives of the assets, ranging from approximately 5 to 17 years. During 2012, 2011 and 2010, amortization expense, including the amortization of trademarks, patents and lease-in-place intangible asset, was approximately $269,000, $47,000 and $13,000, respectively.

Impairment of Long-Lived Assets and Intangible Assets

Long-lived assets including intangible assets with definitive useful lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Intangible assets that have indefinite useful lives are not amortized but, instead, tested at least annually for impairment while intangible assets that have finite useful lives continue to be amortized over their respective useful lives.

Intangible assets are tested for impairment using a two-step process. The first step is to determine the fair value of the reporting unit, which may be calculated using a discounted cash flow methodology, and compare this value to its carrying value. If the fair value exceeds the carrying value, no further work is required, and no impairment loss would be recognized. If the fair value is less than the carrying value, the second step is performed. The second step is an allocation of the fair value of the reporting unit to all of the reporting unit's assets and liabilities under a hypothetical purchase price allocation. Based on the annual evaluations performed by us, there was no impairment of intangible assets during the years ended December 31, 2012, 2011 or 2010.

Deferred Revenue

The majority of our deferred revenue relates to PhotoStamps retail boxes. We sell our PhotoStamps retail boxes to our customers through our website and selected third parties. Proceeds from the sale of our PhotoStamps retail boxes are initially recorded as a liability when received. We record the liability for outstanding PhotoStamps retail boxes in deferred revenue.

F-9

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Revenue Recognition

We recognize revenue from product sales or services rendered, as well as commissions from advertising or sale of products by third party vendors to our customer base when the following four revenue recognition criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured.

Service revenue is primarily derived from monthly subscription and transaction fees and is recognized in the period that services are provided. Product sales, net of return allowances, are recorded when the products are shipped and title passes to customers. Sales of items, including PhotoStamps, sold to customers are made pursuant to a sales contract that provides for transfer of both title and risk of loss upon our delivery to the carrier. Return allowances for expected product returns, which reduce product revenue, are estimated using historical experience. Commissions from the advertising or sale of products by a third party vendor to our customer base are recognized when the revenue is earned and collection is deemed probable.

Customers pay face value for postage purchased for use through our PC Postage software, and the funds are transferred directly from the customers to the United States Postal Service (“USPS”). We do not recognize revenue for this postage, as it is purchased by our customers directly from the USPS.

PhotoStamps revenue, which includes the face value of postage, from the sale of PhotoStamps sheets and rolls is made pursuant to a sales contract that provides for transfer of both title and risk of loss upon our delivery to the carrier.

Sale of PhotoStamps retail boxes are initially recorded as deferred revenue. PhotoStamps revenue related to the sale of these PhotoStamps retail boxes is subsequently recognized when either: 1) the PhotoStamps retail box is redeemed, or 2) the likelihood of the PhotoStamps retail box being redeemed is deemed remote (“breakage”) and there is no legal obligation to remit the value of the unredeemed PhotoStamps retail boxes.

On a limited basis, we allow third parties to offer products and promotions to our customer base. These arrangements generally provide payment in the form of a flat fee or revenue sharing arrangements where we receive payment upon customers accessing third party products and services. Total revenue from such advertising arrangements was not significant during 2012 and 2011.

We provide our customers with the opportunity to purchase parcel insurance directly through our software. Insurance revenue represents the gross amount charged to the customer for purchasing insurance and the related cost represents the amount paid to the insurance broker, Parcel Insurance Plan. We recognize revenue on insurance purchases upon the ship date of the insured package.

PhotoStamps Retail Boxes

We sell PhotoStamps retail boxes that are redeemable for PhotoStamps on our website. The PhotoStamps retail boxes are sold through various third party retail partners. Our PhotoStamps retail boxes are not subject to administrative fees on unredeemed boxes and have no expiration date. PhotoStamps retail box sales are recorded as deferred revenue. Prior to the second quarter of 2011, revenue was recognized only on boxes that were actually redeemed on our website.

During the second quarter of 2011, we concluded that sufficient company-specific historical evidence existed to determine the period of time after which the likelihood of the PhotoStamps retail boxes being redeemed was remote. Based on our analysis of the redemption data, we estimate that period of time to be 60 months after the sale of our PhotoStamps retail boxes.

F-10

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Beginning in the second quarter of 2011, we began recognizing breakage revenue related to our PhotoStamps retail boxes utilizing the redemption recognition method. Under the redemption recognition method, we recognize breakage revenue from unredeemed retail boxes in proportion to the revenue recognized from the retail boxes that have been redeemed. During the second quarter of 2011, we recognized $2.2 million, which was $0.15 on a per share basis using fully diluted shares as of June 30, 2011 (revenue divided by fully diluted shares outstanding, exclusive of any current or prior period costs related to the retail programs), of retail box breakage revenue, of which $2.1 million related to a cumulative catch-up for previously sold and unredeemed PhotoStamps retail boxes originally recorded as deferred revenue. The retail box breakage revenue recognized was recorded in PhotoStamps revenue. We continue to recognize retail box breakage revenue from PhotoStamps retail boxes using the redemption recognition method. During 2012 and 2011 PhotoStamps retail box breakage revenue was approximately $260,000 and $2.3 million, respectively.

Cost of Service Revenue

Cost of service revenue principally consists of the cost of customer service, certain promotional expenses, system operating costs, credit card processing fees and customer misprints that do not qualify for reimbursement from the USPS. Cost of product revenue principally consists of the cost of products sold through our Mailing & Shipping Supplies Store and the related costs of shipping and handling. The cost of insurance revenue principally consists of parcel insurance offering costs. Cost of PhotoStamps revenue principally consists of the face value of postage, image review costs and printing and fulfillment costs.

Promotional Expense

New PC Postage 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. 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. During 2012, 2011 and 2010 promotional expense was $3.5 million, $3.6 million and $2.7, respectively.

Research and Development Costs

Research and development expense principally consist of compensation for personnel involved in the development of our services, depreciation of equipment and software and expenditures for consulting services and third party software.

Sales and Marketing

Sales and marketing expense principally consists of spending to acquire new customers and compensation and related expenses for personnel engaged in sales, marketing, and business development activities. Ongoing marketing programs include the following: traditional advertising, partnerships, customer referral programs, customer re-marketing efforts, telemarketing, direct sales, direct mail, and online advertising.

Advertising Costs

We expense the costs of producing advertisements as incurred, and expense the costs of communicating and placing the advertising in the period in which the advertising space or airtime is used. For the years ended December 31, 2012, 2011 and 2010, advertising and tradeshow costs were $8.7 million, $7.0 million and $5.5 million, respectively.

F-11

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Internet Advertising

We recognize Internet advertising expense based on the specifics of the individual agreements. Under partner and affiliate agreements, third parties refer prospects to our web site, and we pay the third parties when the customer completes the customer registration process, or in some cases, upon the first successful billing of a customer. We record these expenses on a monthly basis as prospects are successfully converted to customers. Under Internet search advertising, we record expenses based on actual “click activity” on our displayed advertisements following targeted key word searches.

General and Administrative

General and administrative expense principally consists of compensation and related costs for executive and administrative personnel, fees for legal and other professional services, depreciation of equipment and software used for general corporate purposes and amortization of intangible assets.

Income Taxes

We account for income taxes in accordance with ASC 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.

Under the guidance related to uncertain tax positions, we are required to determine whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of liability or benefit to recognize in the financial statements.

Net Income per Share

Net income per share represents net income attributable to common stockholders divided by the weighted average number of common shares outstanding during a reported period. The diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock, including stock options (commonly and hereafter referred to as “common stock equivalents”), were exercised or converted into common stock. Diluted net income per share is calculated by dividing net income during a reported period by the sum of the weighted average number of common shares outstanding plus common stock equivalents for the period.

F-12

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table reconciles share amounts utilized to calculate basic and diluted net income per share (in thousands, except per share data):

	Year Ended December 31,
	2012		2011		2010
Net income	$	38,557	$	26,265	$	5,532

Basic - weighted average common shares		16,079		14,767		14,529
Dilutive effect of common stock equivalents		714		401		156
Diluted - weighted average common shares		16,793		15,168		14,685

Net income per share:
Basic	$	2.40	$	1.78	$	0.38
Diluted	$	2.30	$	1.73	$	0.38

The calculation of dilutive shares excludes the effect of the following options that are considered anti-dilutive (in thousands):

	Year ended December 31,
	2012		2011		2010
Anti-dilutive stock option shares		119		1,023		1,928

Stock-Based Compensation

We estimate the fair value of share-based payment awards on the date of grant using an option-pricing model and recognize stock-based compensation expense during each period based on the value of that portion of share-based payment awards that is ultimately expected to vest during the period, reduced for estimated forfeitures. We estimate forfeitures at the time of grant based on historical data and revise, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Compensation expense recognized for all employee stock options granted is recognized using the straight-line method over their respective vesting periods of three to five years.

During the fourth quarter of 2010, in connection with our special dividend of $2.00 per share, in order to prevent that dividend from diluting or enlarging the rights of the holders of outstanding stock options and purchase rights under certain of our employee plans, including our equity plans, we reduced the exercise price of affected options and rights in a manner that is both value neutral and that did not result in the incurrence of any incremental stock-based compensation expense. Because the exercise price could not be adjusted in this manner without adverse tax consequences for certain option grants, we made value neutral cash payments with respect to those option grants, which compensated option holders for lost economic value in those option grants. These cash payments were expensed as compensation and did not affect our stock-based compensation expense. We did not recognize any similar cash payment in 2012 and 2011.

F-13

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table sets forth the stock-based compensation expense that we recognized for the periods indicated (in thousands):

	2012		2011		2010
Stock-based compensation expense relating to:
Employee and director stock options	$	3,438	$	3,112	$	2,725
Employee stock purchases		553		307		115
Total stock-based compensation expense	$	3,991	$	3,419	$	2,840

Stock-based compensation expense relating to:
Cost of revenues	$	325	$	278	$	253
Sales and marketing		873		764		727
Research and development		893		750		575
General and administrative		1,900		1,627		1,285
Total stock-based compensation expense	$	3,991	$	3,419	$	2,840

We use the Black-Scholes option valuation model to estimate the fair value of share-based payment awards on the date of grant, which requires us to make a number of highly complex and subjective assumptions, including stock price volatility, expected term, risk-free interest rates and projected employee stock option exercise behaviors. In the case of options we grant, our assumption of expected volatility is based on the historical volatility of our stock price over the term equal to the expected life of the options. We base the risk-free interest rate on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life of the options assumed at the date of grant. The estimated expected life represents the weighted-average period the stock options are expected to remain outstanding, determined based on an analysis of historical exercise behavior.

The following are the weighted average assumptions used in the Black-Scholes valuation model for the periods indicated:

	2012			2011			2010
Expected dividend yield		—			—			—
Risk-free interest rate		0.37	%		1.39	%		1.67	%
Expected volatility		50	%		48	%		49	%
Expected life (in years)		3.7			4.4			4.5
Expected forfeiture rate		7	%		9	%		20	%

We elected to utilize the alternative transition method for calculating the tax effects of stock-based compensation. The alternative transition method includes computational guidance to establish the beginning balance of the additional paid-in capital pool (“APIC Pool”) related to the tax effects of employee stock-based compensation, and a simplified method to determine the subsequent impact on the APIC Pool for employee stock-based compensation awards that are vested and outstanding upon adoption of ASC 718. There has been no tax benefit recognized to date from the exercise of stock options. A tax benefit will be recorded in additional paid-in capital when these deductions reduce our future income taxes payable.

At December 31, 2012, we had approximately $5.7 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under our stock incentive plans, which is expected to be recognized over a weighted-average period of 2.0 years.

F-14

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Treasury Stock

During 2012, 2011 and 2010, we repurchased 1.5 million shares for $31.8 million, 426,000 shares for $5.3 million and 1.5 million shares for $13.8 million, respectively.

Segment Information

We operate in a single segment. We are a provider of Internet-based postage solutions located in a single geographic location from which substantially all of our revenue is generated. While components of revenue include both services and products associated with our postage solutions, our Chief Executive Officer, who is the chief operating decision maker, evaluates performance, makes operating decisions and allocates resources based on the financial data provided in our financial statements as a single operating segment.

Website Development Costs

We develop and maintain our website. Costs associated with the operation of our website consist primarily of software and hardware purchased from third parties and administrative cost relating to the maintenance and development of the website. Costs related to the purchase of software and hardware are capitalized based on our capitalization policy. These capitalized costs are amortized based on their estimated useful life. Administrative costs related to the maintenance and development of our website are expensed as incurred.

Recent Accounting Pronouncements

In July 2012, FASB issued Accounting Standards Update No. 2012-02, Goodwill and Other (Topic 350) — Testing Indefinite-Lived Intangible Assets for Impairment (ASU 2012-02), which provides the option for companies to first perform a qualitative assessment to determine whether it is more likely than not (a likelihood of more than 50%) that an indefinite-lived intangible is impaired. This is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. We do not anticipate the adoption of ASU 2012-02 will have a material impact on our consolidated financial statements.

3.	Intangible Assets

We have amortizable and non-amortizable intangible assets consisting of patents, trademarks, other intellectual property and lease-in-place intangible assets with a gross carrying value of $9.4 million and $8.7 million as of December 31, 2012 and 2011, respectively, and accumulated amortization of $8.1 million and $7.8 million as of December 30, 2012 and 2011, respectively. During 2012, we completed our purchase of our new corporate headquarters for an aggregate purchase price of $13.4 million. As a result of the purchase we also acquired existing leases of building tenants, and $700,000 of the initial purchase price was allocated to lease-in-place intangible assets and is being amortized over the remaining actual lease terms, which are as long as 5.5 years. The expected useful lives of our amortizable intangible assets range from approximately 5 to 17 years. As of December 31, 2012, the remaining weighted average amortization period for our amortizable intangible assets is 5.2 years. During 2012, we assessed whether events or changes in circumstances occurred that could potentially indicate that the carrying amount of our intangible assets may not be recoverable. We concluded that there were no such events or changes in circumstances during 2012 and determined that the fair value of our intangible assets was in excess of their carrying value as of December 31, 2012. Aggregate amortization expense on patents, trademarks and lease-in-place intangible asset was approximately $269,000, $47,000 and $13,000 for the years ended December 31, 2012, 2011 and 2010, respectively. Our expected yearly amortization expense for the next five years is approximately $141,000.

F-15

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4.	Cash, Cash Equivalents and Investments

Our cash equivalents, restricted cash and investments consist of money market, U.S. government obligations, asset-backed securities and public corporate debt securities at December 31, 2012 and 2011. We consider all highly liquid investments with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. All of our investments are classified as available for sale and are recorded at market value using the specific identification method. Realized gains and losses are reflected in other income, net using the specific identification method. Net realized gain and loss during the years ended December 31, 2012, 2011 and 2010 is not material to our financial statements. Unrealized gains and losses are included as a separate component of stockholders' equity. We do not intend to sell investments with an amortized cost basis exceeding fair value, and it is not likely that we will be required to sell the investments before recovery of their amortized cost bases. We have four securities with a total fair value of $98,000 that have unrealized losses of approximately $9,000 as of December 31, 2012.

The following table summarizes realized gains and losses for the period indicated (in thousands):

	Year Ended December 31,

	2012			2011		2010

Realized gain	$	11		$	11	$	62
Realized loss		(2	)		—		(97	)
Net realized gain (loss)	$	9		$	11	$	(35	)

On at least a quarterly basis, we evaluate our available for sale securities and record an “other-than-temporary impairment” (“OTTI”) if we believe their fair value is less than historical cost and it is probable that we will not collect all contractual cash flows. We did not record any OTTI during 2012 and 2011 after evaluating a number of factors including, but not limited to:

How much fair value has declined below amortized cost

The financial condition of the issuers

Significant rating agency changes on the issuers

Our intent and ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value

F-16

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes our cash, cash equivalents, restricted cash and investments as of December 31, 2012 and 2011 (in thousands):

	December 31, 2012
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Cash and cash equivalents:
Cash	$	7,043		—		—		$	7,043
Money market		22,533		—		—			22,533
Cash and cash equivalents		29,576		—		—			29,576
Short-term investments:
Corporate notes and bonds		5,248		66		—			5,314
U.S. government and agency securities		1,005		4		—			1,009
Short-term investments		6,253		70		—			6,323
Long-term investments:
Corporate bonds and asset backed securities		10,539		190		(9	)		10,720
Long-term investments		10,539		190		(9	)		10,720
Cash and cash equivalents and investments	$	46,368		260		(9	)	$	46,619

	December 31, 2011
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Cash and cash equivalents:
Cash	$	8,768		—		—		$	8,768
Money market		45,319		—		—			45,319
Cash and cash equivalents		54,087		—		—			54,087
Restricted cash:
Money market		500		—		—			500
Restricted cash		500		—		—			500
Short-term investments:
Corporate notes and bonds		1,400		6		(9	)		1,397
Short-term investments		1,400		6		(9	)		1,397
Long-term investments:
Corporate bonds and asset backed securities		12,084		309		(38	)		12,355
U.S. government and agency securities		1,007		17		—			1,024
Long-term investments		13,091		326		(38	)		13,379
Cash and equivalents, restricted cash and investments	$	69,078		332		(47	)	$	69,363

Restricted cash of $500,000 as of December 31, 2011 was related to the escrow for the purchase of our new corporate headquarters building.

F-17

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes contractual maturities of our marketable fixed-income securities as of December 31, 2012 (in thousands):

	Amortized Cost		Estimated Fair Value
Due within one year	$	6,253	$	6,323
Due after one year through five years		10,539		10,720
Due after five years through ten years		—		—
Total	$	16,792	$	17,043

5.	Fair Value Measurements

Financial assets measured at fair value on a recurring basis are classified in one of the three following categories, which are described below:

Level 1 -

Valuations based on unadjusted quoted prices for identical assets in an active market.

Level 2 -

Valuations based on quoted prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets.

Level 3 -

Valuations based on inputs that are unobservable and involve management judgment and our own assumptions about market participants and pricing.

The following table summarizes our financial assets measured at fair value on a recurring basis as of December 31, 2012 and 2011 (in thousands):

			Fair Value Measurement at Reporting Date Using
Description	December 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Cash and cash equivalents	$	29,576	$	29,576	$	—	$	—
Available-for-sale debt securities		17,043		—		17,043		—
Total	$	46,619	$	29,576	$	17,043	$	—

F-18

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

			Fair Value Measurement at Reporting Date Using
Description	December 31, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Cash, restricted cash and cash equivalents	$	54,587	$	54,587	$	—	$	—
Available-for-sale debt securities		14,776		—		14,776		—
Total	$	69,363	$	54,587	$	14,776	$	—

The fair value of our available-for-sale debt securities included in the Level 2 category is based on the market values obtained from an independent pricing service that were evaluated using pricing models that vary by asset class and may incorporate available trade, bid and other market information and price quotes from well established independent pricing vendors and broker-dealers.

There were no non-financial assets or liabilities that were required to be measured at fair value as of December 31, 2012 and 2011.

6.	Accounts Payable and Accrued Expenses

The following table summarizes our accounts payable and accrued expenses as of December 31, 2012 and 2011 (in thousands):

	2012		2011

Payroll and related accrual	$	3,783	$	3,252
Cost of sale, inventory and materials accrual		2,366		2,601
Construction and related fixed asset accrual		2,216		—
Professional fees accrual		690		598
Sales and marketing related accrual		2,832		2,529
Operating expenses related accrual		1,651		1,142
Other accruals		2,828		1,953
Accounts payable and accrued expenses	$	16,366	$	12,075

7.	Allowance for Doubtful Accounts

As of December 31, 2012 and 2011, our allowance for doubtful accounts totaled approximately $239,000 and $117,000, respectively. Increases in our allowance for doubtful accounts totaled approximately $122,000 and $9,000 for 2012 and 2011, respectively. There were no material write-offs against the allowance for doubtful accounts during 2012 or 2011.

F-19

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8.	Property and Equipment

Property and equipment is summarized as follows (in thousands):

	2012			2011
Land	$	7,156		$	—
Building		4,886			—
Building improvements		13,569			—
Furniture and equipment		1,362			2,178
Computers and software		8,311			14,494
Leasehold improvements		—			1,769
		35,284			18,441
Less accumulated depreciation and amortization		(6,653	)		(16,276	)
Property and equipment, net	$	28,631		$	2,165

During 2012, 2011 and 2010, depreciation expense was approximately $1.4 million, $838,000 and $881,000, respectively. Prior to 2010, we incurred $634,000 in capitalized fixed assets related to a project to launch a new third party billing system. During 2010, we made a decision to abandon this project before it was completed and went live. As a result, we wrote-off $634,000 of fixed assets in the fourth quarter of 2010. We did not have any similar write-off in 2012 or 2011.

9.	Income Taxes

During 2012, our net income tax benefit consisted of federal and state minimum taxes and a reduction of a portion of our valuation allowance on our deferred tax asset (as described below). Our effective income tax rate differs from the statutory income tax rate primarily as a result of the reduction of a portion of our valuation allowance. We evaluated the appropriateness of our deferred tax assets and related valuation allowance in accordance with ASC 740 based on all available positive and negative evidence. A valuation allowance is recorded against a portion of our gross deferred tax assets as we have determined the realization of these assets does not meet the more likely than not criteria.

During the second quarter of 2010, we recorded an income tax benefit of approximately $4.0 million when we determined that a release of a portion of our valuation allowance was appropriate as a result of the following discrete events: (1) the attainment of over five consecutive years of taxable income, (2) the material decline of our Section 382 ownership under the Internal Revenue Code from approximately 34% as of March 31, 2010 to approximately 24% as of June 30, 2010, and (3) the settlement of our outstanding patent infringement litigation with Kara Technology, which improved our confidence in our short-term taxable income projection by eliminating the uncertainty of a potential large negative judgment against us and eliminating the related on-going third party litigation expenses. During the fourth quarter of 2011, we released a portion of our valuation allowance totaling approximately $8.5 million as a result of an increase in our projected taxable income.

On March 6, 2012, we entered into a binding agreement with PSI Systems, Inc. (PSI) to resolve all outstanding patent litigation among the parties. Because the PSI litigation settlement occurred during the first quarter of 2012, we eliminated what had previously been negative evidence at that time. The litigation settlement then became positive evidence because (1) it eliminated the hard-to-predict fluctuations in litigation expenditures, which we expected to be material in future forecasts, (2) it eliminated the potential for a material negative financial judgment against us and (3) it eliminated the possibility of an injunction against us. We believe the other positive and negative evidence we evaluated is consistent (e.g., no material change has occurred) relative to our evaluation of this evidence in prior periods. Based on this discrete event, we extended our forecast of projected taxable income from two years to three years for the portion of our deferred tax asset for which it was more likely than not that a tax benefit would be realized under ASC 740 as of March 31, 2012. As a result, we released a portion of our valuation allowance totaling $11.9 million during the first quarter of 2012. During the fourth quarter of 2012, based on our updated forecast of three year projected taxable income and a change in the California state tax laws, we recorded another release of a portion of our valuation allowance totaling approximately $2.5 million.

F-20

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In making these determinations, we considered the available positive and negative evidence, including our recent earnings trend, expected future taxable income and the federal and state effective tax rates related to the future taxable income. As of December 31, 2012, we continued to maintain a valuation allowance for the remainder of our gross deferred tax assets.

In September 2008, the State of California passed legislation temporarily suspending the use of NOLs to offset current state income tax expense for the tax years 2008 and 2009. In October 2010, the State of California passed legislation extending this suspension for tax years 2010 and 2011. We did not incur any additional California state income tax as a result of the state NOL suspension during the year ended December 31, 2010 as we were able to offset 100% of our state income tax liability through the use of our research and development tax credits. During 2011 we were in a taxable loss position for tax reporting purposes and as a result we did not use any tax credits. We recorded a current tax provision for corporate alternative minimum federal taxes and state taxes of approximately $565,000, $0 and $34,000 during the years ended December 31, 2012, 2011 and 2010, respectively. Total tax benefit recorded was approximately $13.9 million, $8.5 and $3.9 million during the years ended December 31, 2012, 2011 and 2010, respectively.

In accordance with the guidance we have evaluated our research and development tax credits for uncertain tax positions. As of December 31, 2012 we have research and development tax credits totaling $6.8 million for Federal and California purposes. In addition, we had $1.9 million of unrecognized federal tax benefits which is subject to examination by the taxing authorities and upon further examination, we may increase or decrease our unrecognized tax benefit based on the results of the examination.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the years ended December 31, 2012, 2011 and 2010 (in thousands):

	Unrecognized Tax Benefits
Balance at December 31, 2009	$	(1,710	)
Additions for tax positions of prior years		(23	)
Addition for tax position of the current year		—
Settlement		—
Balance at December 31, 2010	$	(1,733	)
Reduction for tax positions of prior years		71
Addition for tax position of the current year		(83	)
Settlement		—
Balance at December 31, 2011	$	(1,745	)
Reductions for tax positions of prior years		—
Additions for tax position of the current year		(160	)
Settlement		—
Balance at December 31, 2012	$	(1,905	)

F-21

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Our policy is to recognize interest and penalties expense, if any, related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2012, we have not recorded any interest and penalty expense.

We remain subject to examination by the relevant tax authorities. These include the 2009 through 2011 tax years for federal purposes and the 2010 through 2011 tax years for California purposes.

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 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, 2012 and 2011 are presented below (in thousands):

	2012			2011
Deferred tax assets (liabilities):
Net operating loss carryforward	$	63,830		$	77,737
Tax credits		5,467			4,161
Depreciation		(139	)		84
Amortization		494			775
Accruals		2,214			2,540
Total deferred tax assets		71,866			85,297
Valuation allowance		(41,317	)		(69,172	)
Net deferred tax assets	$	30,549		$	16,125

We have NOL carryforwards of approximately $210 million and $100 million for federal and state income tax purposes, respectively, at December 31, 2012 which can be carried forward to offset future taxable income. We have available tax credit carryforwards of approximately $5.3 million and $3.1 million for federal and state income tax purposes, respectively at December 31, 2012, which can be carried forward to offset future taxable liabilities. Our federal NOLs will begin to expire in 2020, and our state NOLs will begin to expire in 2013. The federal tax credits begin to expire in 2018. Under California law, California tax credits do not have an expiration date.

We recognize excess tax benefits associated with the exercise of stock options directly to stockholders’ equity only when realized. Accordingly, deferred tax assets are not recognized for NOL resulting from excess tax benefits. As of December 31, 2012, deferred tax assets do not include approximately $9.1 million of these excess tax benefits from employee stock option exercises that are a component of our NOL carryforwards. Accordingly, additional paid-in capital will increase up to an additional $9.1 million if and when such excess tax benefits are realized.

The Federal Tax Reform Act of 1986 and similar state tax laws contain provisions that may limit the NOL carryforwards to be used in any given year upon the occurrence of certain events, including a significant change in ownership interests.

We maintain a study to understand the status of net operating losses. Based on that study, we believe that we have not undergone an Internal Revenue Code (IRC) Section 382 change of ownership that would trigger an impairment of the use of our NOLs since our secondary offering in December 1999. Under IRC Section 382 rules, a change in ownership can occur whenever there is a shift in ownership by more than 50 percentage points by one or more “5% shareholders” within a three-year period. When a change of ownership is triggered, the NOLs may be impaired. We estimate that, as of December 31, 2012 we were at approximately 22% level compared with the 50% level that would trigger impairment of our NOLs.

F-22

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The benefit for income taxes consists of (in thousands):

	2012			2011			2010
Current:
Federal	$	411		$	—		$	34
State		154			—			—
		565			—			34

Deferred:
Federal		(15,958	)		(7,245	)		(3,396	)
State		1,534			(1,230	)		(583	)
		(14,424	)		(8,475	)		(3,979	)
Benefit for income taxes	$	(13,859	)	$	(8,475	)	$	(3,945	)

Differences between the benefit for income taxes and income taxes at the statutory federal income tax rate are as follows (in thousands):

	2012			2011			2010
Income tax at statutory federal rate	$	8,823		$	6,057		$	534
State income taxes, net of federal benefit		1,516			1,044			36
Effect of permanent differences		12			12			467
Change in valuation allowance - discrete release		(14,424	)		(8,475	)		(3,979	)
Other changes in valuation allowance, net (1)		(13,431	)		(7,225	)		(1,026	)
Change in state rate		4,186			—			—
Unrecognized tax benefits		160			12			23
Other		(701	)		100			—
	$	(13,859	)	$	(8,475	)	$	(3,945	)

(1) Other changes in valuation allowance, net includes the tax effect of utilization of net operating losses of $13 million, $0 and $401,000 for the years ended December 31, 2012, 2011 and 2010, respectively, which were provided for as part of the valuation allowance prior to utilization.

10. Employee Stock Plans

Stock Incentive Plans

Our 1999 Stock Incentive Plan (the “1999 Plan”), which became effective in June 1999, was the successor to the 1998 Stock Plan (the “1998 Plan”). Upon approval of the 1999 Plan, all outstanding options under the 1998 Plan were transferred to the 1999 Plan, and no further option grants were made under the 1998 Plan. All outstanding options under the 1998 Plan continue to be governed by the terms and conditions of the existing option agreements for those grants, unless our compensation committee decides to extend one or more features of the 1999 Plan to those options. In June 2009, our 1999 Plan expired and no further options grants were made under the 1999 Plan. Our 2010 Equity Incentive Plan (the “2010 Plan”) was approved by our stockholders in June 2010. Under the 2010 Plan, we are authorized to issue 3,500,000 shares of common stock and stock units, although “full value” awards (such as restricted stock and restricted stock units) will be counted against the 2010 Plan’s overall limits as two shares (rather than one), while options and stock appreciation rights will be counted as one share. A summary of stock option activity is as follows (in thousands, except per share amounts):

F-23

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

	Options Outstanding			Weighted Average
	Number of Options			Exercise Price
Balance at December 31, 2009		3,176		$	14.38
Granted		207			11.33
Forfeited		(325	)		21.69
Exercised		(280	)		7.22
Balance at December 31, 2010		2,778		$	12.58
Granted		1,718			13.20
Forfeited		(136	)		12.01
Exercised		(2,043	)		12.25
Balance at December 31, 2011		2,317		$	13.36
Granted		192			25.50
Forfeited		(88	)		21.44
Exercised		(560	)		13.04
Balance at December 31, 2012		1,861		$	14.33

The weighted-average fair value of stock grants for 2012, 2011 and 2010 using the Black-Scholes valuation method are as follows:

	2012		2011		2010
Weighted-average fair value of stock options with an exercise price equal to the market price on the grant date	$	5.04	$	5.05	$	4.71
Weighted-average fair value of stock options with an exercise price greater than the market price on the grant date		—		—		—
Total	$	5.04	$	5.05	$	4.71

Weighted average exercise prices for stock options exercised in 2012 are as follows:

	2012
Weighted-average exercise price of stock options with an exercise price equal to the market price on the grant date	$	13.04
Weighted-average exercise price of stock options with an exercise price greater than the market price on the grant date		13.40
Total weighted-average exercise price	$	13.04

F-24

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following tables summarize information concerning outstanding and exercisable options at December 31, 2012 (in thousands, except number of years and per share amounts):

		Options Outstanding						Options Exercisable
Range of Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life (in Years)		Weighted Average Exercise Price per Share		Number Exercisable		Weighted Average Exercise Price per Share
$	0.00 - $9.99		74		5.5	$	8.98		54	$	8.88
$	10.00 - $19.99		1,520		7.5		12.67		724		12.78
$	20.00 - $29.99		256		8.1		25.03		82		24.25
$	30.00 - $39.99		11		6.5		31.45		5		31.64
$	0.00 - $39.99		1,861		7.5	$	14.33		865	$	13.74

The following table summarizes stock option activity for 2012:

	Number of Stock Options (in thousands)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2011		2,317		$	13.36
Granted		192			25.50
Exercised		(560	)		13.04
Forfeited or expired		(88	)		21.44
Balance at December 31, 2012		1,861		$	14.33		7.5	$	20,504
Exercisable at December 31, 2012		865		$	13.74		6.3	$	9,979

The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on our closing stock price of $25.20 at December 31, 2012, the last trading day of 2012, which would have been received by award holders had all award holders exercised their awards that were in-the-money as of that date.

The weighted average grant date fair value of options granted during 2012, 2011 and 2010 was $9.41, $5.05 and $4.71, respectively. The weighted average grant date fair value of options vested during 2012, 2011 and 2010 was $5.03, $4.78 and $6.12, respectively. The total intrinsic value of options exercised during 2012, 2011 and 2010 was approximately $8.4 million, $25.1 million and $1.9 million, respectively.

F-25

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the status of our non-vested stock options as of December 31, 2012:

	Non-vested Number of Stock Options (in thousands)			Weighted Average Grant Date Fair Value
Nonvested at December 31, 2011		1,550		$	5.07
Granted		192			9.41
Vested		(658	)		5.03
Forfeited / Cancelled		(88	)		8.58
Nonvested at December 31, 2012		996		$	5.67

As of December 31, 2012, there was $5.7 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 2.0 years.

Employee Stock Purchase Plan

In June 1999, our Board of Directors adopted an Employee Stock Purchase Plan (ESPP), which allows our eligible employees to purchase shares of common stock, at semi-annual intervals, with their accumulated payroll deductions.

Eligible participants may contribute up to 15% of cash earnings through payroll deductions, and the accumulated deductions will be applied to the purchase of shares on each semi-annual purchase date. The purchase price per share is equal to 85% of the fair market value per share on the participant’s entry date into the offering period or, if lower, 85% of the fair market value per share on the semi-annual purchase date.

Upon adoption of the plan, 150,000 shares of common stock were reserved for issuance. This reserve automatically increases on the first trading day in January each year, by an amount equal to 1% of the total number of outstanding shares of our common stock on the last trading day in December in the prior year. In no event will any annual increase exceed 260,786 shares.

In July 2009, our Board of Directors amended our ESPP to extend it for a period of ten years beyond its original expiration date of July 31, 2009. Under this amendment, the total shares available for issuance may not increase. As of December 31, 2012 and 2011, we had approximately 1.8 million shares available for issuance under our ESPP. Total shares of common stock issued pursuant to the ESPP during 2012, 2011 and 2010 were approximately 56,000, 56,000 and 48,000, respectively.

Savings Plan

During 1999, we implemented a savings plan for all eligible employees, which qualifies under Section 401(k) of the Internal Revenue Code. Participating employees may contribute up to 20% of their pretax salary, but not more than statutory limits. We match 50% of the first 4% a participant contributes. We expensed approximately $303,000, $276,000 and $228,000 in 2012, 2011 and 2010, respectively, related to this plan.

F-26

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11.	Legal Proceedings

On November 22, 2006, we filed a lawsuit against Endicia, Inc. and PSI Systems, Inc. in the United States District Court for the Central District of California for infringement of eleven of our patents covering, among other things, Internet postage technology. We sought an injunction, unspecified damages, and attorneys’ fees. On November 10, 2008, we were required to select fifteen claims (from over six hundred claims available) to be the subject of the trial. On November 9, 2009, the Court granted the summary judgment motion of Endicia, Inc. and PSI Systems, Inc. that the fifteen claims we selected are invalid. On June 15, 2011, the United States Court of Appeals for the Federal Circuit affirmed the summary judgment ruling.

On August 8, 2008, PSI Systems, Inc. filed a lawsuit against us in the same court, alleging that we infringed three PSI Systems patents related to Internet postage technology. PSI Systems sought an injunction, unspecified damages, and attorneys’ fees. On September 16, 2008, we filed counterclaims for infringement of four more of our patents. In our counterclaim, we sought an injunction, unspecified damages, and attorneys’ fees. On March 6, 2012, we entered into a binding agreement with PSI Systems, Inc. to resolve all outstanding patent litigation among the parties. On April 23, 2012, we executed a patent license and settlement agreement. Under the terms of the agreement, the parties agreed to a patent cross-licensing arrangement for the patents in dispute in (i) the lawsuit filed by Stamps.com against Endicia, Inc. and PSI Systems, Inc. on November 22, 2006 and (ii) the lawsuit filed by PSI Systems, Inc. against Stamps.com Inc. on August 8, 2008, both in the United States District Court for the Central District of California. In addition, the parties agreed to a five-year period where each will not sue the other for patent infringement. No payments were made to either party as part of the settlement.

In 2001, we were named, together with certain of our current and former board members and/or officers, as a defendant in several purported class-action lawsuits, filed in the U.S. District Court for the Southern District of New York. The lawsuits alleged violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 in connection with our initial public offering and a secondary offering of our common stock. Plaintiffs sought damages and statutory compensation, including interest, costs and expenses (including attorneys’ fees). In October 2009, the court approved a settlement of this action, which does not require us to make any payments. In January 2012, that settlement became final following the resolution of all appeals.

We are subject to various other routine legal proceedings and claims incidental to our business, and we do not believe that these proceedings and claims would reasonably be expected to have a material adverse effect on our financial position, results of operations or cash flows.

12.	Subsequent Events

We are not aware of any material subsequent events or transactions that have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements.

F-27

Table of Contents

STAMPS.COM INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

13.	Quarterly Information (Unaudited)

	Quarter Ended
	March			June			September		December
	(in thousands except per share data)
Fiscal Year 2012:
Revenues	$	28,293		$	28,227		$	29,071	$	30,070
Gross profit		21,030			21,589			22,578		22,708
Income from operations		4,421			5,824			7,085		6,827
Net income		16,360	(2)		5,923			6,977		9,297	(2)
Net income per share:
Basic	$	1.01		$	0.36		$	0.43	$	0.60
Diluted	$	0.95		$	0.34		$	0.42	$	0.58
Weighted average shares outstanding:
Basic		16,250			16,468			16,103		15,502
Diluted		17,173			17,196			16,675		16,129

Fiscal Year 2011:
Revenues	$	22,817		$	26,630	(1)	$	24,918	$	27,220
Gross profit		16,593			19,945			18,596		20,239
Income from operations		2,584			5,627			4,434		4,583
Net income		2,675			5,677			4,528		13,385
Net income per share:
Basic	$	0.18		$	0.40		$	0.31	$	0.85
Diluted	$	0.18		$	0.39		$	0.30	$	0.81
Weighted average shares outstanding:
Basic		14,484			14,321			14,556		15,694
Diluted		14,613			14,450			15,059		16,551

Quarterly and year-to-date computations of per share amounts are made independently. Therefore, the sum of per share amounts for the quarters may not agree with per share amounts for the year shown elsewhere in our Annual Report on Form 10-K.

____________

(1) During the second quarter of 2011 we recognized $2.2 million of retail box breakage revenue, of which $2.1 million related to a cumulative catch-up for previously sold and unredeemed PhotoStamps retail boxes originally recorded as deferred revenue. The retail box breakage revenue recognized was recorded in PhotoStamps revenue.

(2) During the first quarter of 2012 we released a portion of our valuation allowance totaling approximately $11.9 million. During the fourth quarter of 2012 we released another portion of our valuation allowance totaling approximately $2.5 million (See Income Taxes - Notes to Consolidated Financial Statements).

F-28

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Los Angeles, State of California, on the 15th day of March 2013.

	STAMPS.COM INC.

	By:	/s/ KENNETH MCBRIDE
		Kenneth McBride
		Chief Executive Officer and Chairman of the Board of Directors

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature	Title	Date

/s/ KENNETH MCBRIDE	Chief Executive Officer and Chairman of the Board of Directors	March 15, 2013
Kenneth McBride	(Principal Executive Officer)

/s/ KYLE HUEBNER	Chief Financial Officer and Co-President	March 15, 2013
Kyle Huebner	(Principal Financial and Accounting Officer)

*	Director	March 15, 2013
Mohan P. Ananda

*	Director	March 15, 2013
G. Bradford Jones

*	Director	March 15, 2013
Lloyd I. Miller

*By Kenneth McBride as Attorney-in-fact.

Delaware		77-0454966
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

Title of each class		Name of Each Exchange on Which Registered
Common Stock, $.001 par value		The NASDAQ Stock Market, LLC

	Large accelerated filer ¨	Accelerated filer x
	Non-accelerated filer ¨	Smaller reporting company ¨
	(do not check if smaller reporting company)

			Page

PART I.			1

	ITEM 1.	BUSINESS.	1

	ITEM 1A.	RISK FACTORS.	10

	ITEM 1B.	UNRESOLVED STAFF COMMENTS.	17

	ITEM 2.	PROPERTIES.	17

	ITEM 3.	LEGAL PROCEEDINGS.	18

	ITEM 4.	MINE SAFETY DISCLOSURES.	18

PART II.			19

	ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.	19

	ITEM 6.	SELECTED FINANCIAL DATA	22

	ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	23

	ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	37

	ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.	38

	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.	38

	ITEM 9A.	CONTROLS AND PROCEDURES.	38

	ITEM 9B.	OTHER INFORMATION.	38

PART III.			40

	ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.	40

	ITEM 11.	EXECUTIVE COMPENSATION.	40

	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.	40

	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.	40

	ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES.	40

PART IV.			41

	ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES.	41

	High		Low
Fiscal Year 2011
First Quarter	$	13.83	$	10.97
Second Quarter	$	13.56	$	11.86
Third Quarter	$	23.78	$	13.28
Fourth Quarter	$	32.73	$	19.36
Fiscal Year 2012
First Quarter	$	32.87	$	23.39
Second Quarter	$	30.31	$	22.25
Third Quarter	$	25.47	$	18.84
Fourth Quarter	$	28.38	$	20.62

	Closing Price
December 31, 2012	$	25.20
February 28, 2013	$	24.39

	Base
	December 31,		Year ended December 31,
Company/Index	2007		2008		2009		2010		2011		2012

Stamps.com Inc.	$	100.00	$	80.71	$	73.89	$	108.78	$	246.39	$	237.62

NASDAQ
Market Index	$	100.00	$	59.46	$	85.55	$	100.02	$	98.22	$	113.85

Morgan Stanley
Internet Index	$	100.00	$	54.10	$	105.85	$	139.17	$	129.40	$	170.05


		Number of shares of
Number of shares of		common stock remaining
common stock to be		available for future
issued upon exercise	Weighted-average exercise	issuance under equity
of outstanding options,	price of outstanding options,	compensation plans
warrants and rights	warrants and rights	(excluding shares
(a)		reflected in column (a))
865,490	$14.33	1,861,097

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (in 000’s)
October 1, 2012 – October 31, 2012		87,000	$	20.94		87,000	$	21,500
November 1, 2012 – November 30, 2012		223,023	$	24.37		223,023	$	18,461
December 1, 2012 – December 31, 2012		188,877	$	24.45		188,877	$	13,738

	As of December 31,
	2012		2011		2010		2009		2008
Balance Sheet Data:	(in thousands)

Cash, cash equivalents, restricted cash and investments	$	46,619	$	69,363	$	35,299	$	71,745	$	74,059
Working capital		38,035		57,953		16,041		41,791		63,037
Total assets		130,852		107,980		57,442		89,258		93,258
Total stockholders’ equity		112,954		94,007		44,238		75,605		78,341

	2012		2011		% Change
Revenues
Service	$	88,173	$	75,535		17	%
Product		14,710		13,465		9	%
Insurance		7,120		4,321		65	%
PC Postage Revenue		110,003		93,321		18	%
PhotoStamps		5,651		8,258		(32	%)
Other		7		6		9	%
Total revenues		115,661		101,585		14	%

Year	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Annual Average

2012		413		418		419		435		421
2011		360		368		374		385		372

Core PC Postage Business	2012		2011		% Change

Average paid customers for the year (000s)		421		372		13	%
Average annual revenue per paid customer	$	254	$	242		5	%
Core PC Postage Revenue ($000s)	$	106,979	$	90,150		19	%

Core PC Postage Revenue	2011		2010		% Change

Average paid customers for the year (in thousands)		372		337		10	%
Average annual revenue per paid customer	$	242	$	219		11	%
Core PC Postage Revenue ($000s)	$	90,150	$	73,814		22	%

	Twelve months ended December 31,
	2011			2010
Total Revenues:
Service		74.4	%		75.5	%
Product		13.3	%		13.7	%
Insurance		4.3	%		2.4	%
PhotoStamps		8.1	%		8.4	%
Other		0.0	%		0.0	%
Total revenues		100.0	%		100.0	%
Cost of revenues:
Service		14.5	%		15.5	%
Product		4.8	%		5.1	%
Insurance		1.5	%		0.7	%
PhotoStamps		5.0	%		6.3	%
Total cost of revenues		25.8	%		27.7	%
Gross profit		74.2	%		72.3	%
Operating expenses:
Sales and marketing		34.0	%		36.4	%
Research and development		9.2	%		11.0	%
General and administrative		14.0	%		17.1	%
Legal settlements		0.0	%		6.1	%
Total operating expenses		57.2	%		70.6	%
Income from operations		17.0	%		1.7	%
Asset write-off		0.0	%		-0.7	%
Interest and other income, net		0.6	%		0.9	%
Income before income taxes		17.5	%		1.9	%
Income tax benefit		-8.3	%		-4.6	%
Net income		25.9	%		6.5	%

	Page
Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets at December 31, 2012 and 2011	F-2
Consolidated Statements of Income for the years ended December 31, 2012, 2011 and 2010.	F-3
Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011 and 2010 .	F-4
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2012, 2011 and 2010.	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010	F-6
Notes to Financial Statements	F-7

Exhibit Number	Description

3.1	Amended and Restated Certificate of Incorporation of the Company.(11)

3.2	Bylaws of the Company.(3)

3.3	Resolution Amending Bylaws of Stamps.com Inc. (13)

4.1	Specimen common stock certificate.(4)

10.1	Patent Assignment from Mohan P. Ananda to the Company, dated January 20, 1998.(1)

10.2	Assignment and License Agreement between the Company and Mohan P. Ananda, dated January 20, 1998.(1)

10.3	1998 Stock Plan and Forms of Notice of Grant and Stock Option Agreement.(2) +++

10.4	1999 Stock Incentive Plan (as amended and restated on April 25, 2000).(7) +++

10.5	1999 Employee Stock Purchase Plan (as amended and restated on February 9, 2000).(6) +++

10.6	Form of Indemnification Agreement between the Company and its directors and officers.(1) +++

10.7+	Patent License and Settlement Agreement dated December 19, 2003 by and between Stamps.com Inc. and Pitney Bowes Inc. (8)

10.8++	Agreement dated July 14, 2004 by and between Stamps.com Inc., eBay Inc. and PayPal, Inc. (9)

Exhibit Number	Description

10.9	Form of Notice of Grant of Stock Option (1999 Stock Incentive Plan).(5) +++

10.10	Form of Stock Option Agreement (1999 Stock Incentive Plan).(5) +++

10.11	Form of Addendum to Stock Option Agreement—Involuntary Termination Following Corporate Transaction/Change in Control (1999 Stock Incentive Plan).(5) +++

10.12	Form of Addendum to Stock Option Agreement—Limited Stock Appreciation Right (1999 Stock Incentive Plan).(5) +++

10.13	Form of Stock Issuance Agreement (1999 Stock Incentive Plan).(5) +++

10.14	Form of Addendum to Stock Issuance Agreement—Involuntary Termination Following Corporate Transaction/Change in Control (1999 Stock Incentive Plan).(5) +++

10.15	Form Automatic Stock Option Agreement (1999 Stock Incentive Plan).(5) +++

10.16	Form Notice of Grant of Non-Employee Director—Automatic Stock Option (Initial) (1999 Stock Incentive Plan).(5) +++

10.17	Form Notice of Grant of Non-Employee Director—Automatic Stock Option (Annual) (1999 Stock Incentive Plan).(5) +++

10.18	Form of Enrollment/Change Form for Employee Stock Purchase Plan.(5) +++

10.19	Form of Stock Purchase Agreement for Employee Stock Purchase Plan.(5) +++

10.20	Stock Purchase Agreement (12) +++

10.21	2010 Equity Incentive Plan.(13) +++

10.22	Form of Stock Option Agreement.(14) +++

10.23	Settlement Agreement among the Company, Kara Technology Incorporated and Salim Kara.(15)

10.24	Agreement of Purchase And Sale and Joint Escrow Instructions.(16)

14	Code of Ethics.(10)

21	List of Subsidiaries: PhotoStamps Inc., a California corporation

23.1	Consent of Ernst & Young LLP.(17)

24.1	Power of Attorney by G. Bradford Jones.(17)

24.2	Power of Attorney by Mohan Ananda.(17)

24.3	Power of Attorney by Lloyd I. Miller.(17)

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.(17)

31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.(17)

Exhibit Number	Description

32.1	Certification of Chief Executive Office pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(17)

32.2	Certification of Chief Financial Office pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(17)