Overstock.com 2010 Annual Report Download - page 70

Table of Contents
the year ended December 31, 2008, is due to a decrease in total cash, lower interest rates and the settlement of notes receivable related to our travel. Interest
expense is largely related to interest incurred on our Senior Notes, and to a lesser extent our capital lease obligations. Interest expense for the years ended
December 31, 2009 and 2008 totaled $3.5 million and $3.6 million, respectively.
Other income, net
For the year ended December 31, 2009, other income was $3.3 million, which relates primarily to gains from the early extinguishment of a portion of our
3.75% Convertible Senior Notes ("Senior Notes"). For the year ended December 31, 2009, we retired a total of $7.4 million of our Senior Notes for
$4.6 million in cash and recorded a $2.8 million gain, net of amortization of debt discount of $92,000.
For the year ended December 31, 2008, other income (expense) was net expense of $(1.4) million. This included a $2.8 million gain, net of amortization
of debt discount of $142,000 on the retirement of $9.5 million of the 3.75% Senior Notes (see Item 15 of Part IV, "Financial Statements"—Note 17—"Stock
and Debt Repurchase Program"), a $3.9 million loss on the settlement of notes receivable and a $300,000 other-than-temporary impairment of marketable
securities.
Sale of discontinued operations
On January 21, 2009, we entered into a Note Purchase Agreement to settle both the senior and junior promissory notes related to the sale of our travel
subsidiary to Castles Travel, Inc. for $1.3 million in cash and recognized a loss on the settlement of these notes and interest receivable of approximately
$3.9 million which was recorded in other income (expense), net during the year ended December 31, 2008. We agreed to the reduced amount for the notes due
to concern regarding the financial viability of the entity holding the notes, as a result of the impact of the economic downturn on the travel industry that began
during the latter part of 2008.
Income taxes
Our provision for income taxes for the year ended December 31, 2009 of $257,000 is for federal alternative minimum taxes and state taxes. As of
December 31, 2009 and 2008, we had net operating loss carry forwards of approximately $180.9 million and $182.0 million and state net operating loss carry-
forwards of approximately $150.7 million and $145.8 million, respectively, which may be used to offset future taxable income. We may have experienced
ownership changes under Internal Revenue Code Section 382 that may limit our ability to fully use our net operating losses.
Seasonality
Based upon our historical experience, revenue typically increases during the fourth quarter because of the holiday retail season. The actual quarterly
results for each quarter could differ materially depending upon consumer preferences, availability of product and competition, among other risks and
uncertainties. Accordingly, there can be no assurances that seasonal variations will not materially affect our results of operations in the future. The following
table reflects our total net revenues for each of the quarters for 2009 and 2008 (in thousands):
First
Quarter Second Quarter Third Quarter Fourth Quarter
2009 $ 185,729 $ 174,898 $ 193,783 $ 322,359
2008 201,800 188,202 186,007 253,841
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