Overstock.com 2005 Annual Report Download - page 91

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Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
4. MARKETABLE SECURITIES (Continued)
a loss of $2.6 million, which is recorded in net income, and changes in fair value of the bond instrument resulting in a gain of
$1.1 million, which is recorded as a component of accumulated other comprehensive income (loss) in the Balance Sheet.
The Company purchased the Foreign Notes to manage its foreign currency risks related to the strengthening of Asian currencies
compared to the U.S. dollar, which would reduce the inventory purchasing power of the Company in Asia. However, the Company
determined that the Foreign Notes did not qualify as hedging derivative instruments. Nevertheless, management believes that such
instruments are useful in managing the Company's associated risk.
5. INVENTORIES
Inventories consist of the following (in thousands):
December 31,
2004 2005
Product inventory $ 47,881 $ 98,510
Less: reserve for obsolescence (1,323)(5,241)
$ 46,558 $ 93,269
6. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
December 31,
2004 2005
Computer hardware and software $ 16,717 $ 73,411
Furniture and equipment 8,128 8,920
Leasehold improvements 231 1,960
25,076 84,291
Less: accumulated depreciation and amortization (8,954 )(22,377 )
$ 16,122 $ 61,914
Depreciation and amortization of property and equipment totaled $2.3 million, $3.9 million, and $14.2 million for the years
ended December 31, 2003, 2004 and 2005, respectively.
Property and equipment included assets under capital leases of $2.8 million and $15.4 million at December 31, 2004 and 2005,
respectively and accumulated amortization related to assets under capital leases of $1.3 million and $8.4 million, respectively.
F-21