Overstock.com 2010 Annual Report Download - page 73

Table of Contents
Financing activities for the year ended December 31, 2010 resulted in net cash outflows of $9.4 million primarily from $24.9 million used for retirement
of long-term debt, partially offset by $16.4 million in proceeds from finance obligations (which were primarily used for retirement of long-term debt) and
$1.5 million in proceeds from the exercise of stock options.
Financing activities for the year ended December 31, 2009 resulted in cash outflows of $5.7 million primarily for the retirement of long-term debt.
Redeemable common stock
In June 2009, we discovered that we had inadvertently issued 203,737 more shares of our common stock in connection with our 401(k) plan than had
been registered with the Securities and Exchange Commission for offer in connection with the 401(k) plan. These shares were contributed to or otherwise
acquired by participants in the 401(k) plan between August 16, 2006, and June 17, 2009. As a result, certain participants in the 401(k) plan may have or have
had rescission rights relating to the unregistered shares, although we believe that the federal statute of limitations applicable to any such rescission rights
would be one year, and that the statute of limitations had already expired at June 30, 2009 with respect to most of the inadvertent issuances.
On August 31, 2009, we entered into a Tolling and Standstill Agreement (the "Tolling Agreement") with the Overstock.com, Inc. Employee Benefits
Committee (the "Committee") relating to the 401(k) plan. We entered into the Tolling Agreement in order to preserve certain rights, if any, of plan
participants who acquired shares of Overstock common stock in the plan between July 1, 2008 and June 30, 2009. In August 2010, we made a registered
rescission offer to affected participants in the plan who acquired shares of Overstock common stock during the Purchase Period. The rescission offer applied
to shares purchased during the Purchase Period at prices ranging from $6.77 per share to $21.17 per share. On October 6, 2010, our rescission offer expired.
As a result of the offer, we repurchased 1,202 shares of common stock for $26,000. On October 14, 2010 we terminated the Tolling Agreement. As a result of
the termination of the Tolling Agreement, we reclassified 17,763 shares or $260,000 of common stock from temporary to permanent equity due to the
expiration of potential rescission rights. The remaining redeemable shares will be reclassified into permanent equity upon the expiration of potential rescission
rights associated with those common shares. At December 31, 2010 and 2009 approximately 46,000 shares or $570,000 and 65,000 shares or $744,000 of our
common stock plus interest were classified outside stockholders' equity, respectively.
Stock and Debt Repurchase Program
On February 17, 2009, the Board of Directors approved a debt repurchase program that authorized us to use up to $20.0 million in cash to repurchase a
portion of our 3.75% Senior Convertible Notes due 2011 ("Senior Notes"). On September 21, 2010, the Board of Directors approved a $15.0 million increase
to our existing debt repurchase program. Under this repurchase program, we retired $25.4 million of the Senior Notes during the year ended December 31,
2010 for $24.9 million in cash, resulting in a gain of $346,000 on early extinguishment of debt, net of $158,000 of associated unamortized discount at an
approximate 5% yield to maturity. (see Item 1 of Part I, "Financial Statements"—Note 17—"Stock and Debt Repurchase Program"). We retired $7.4 million
of the Senior Notes during the year ended December 31, 2009 for $4.6 million in cash, resulting in a gain of $2.8 million on early extinguishment of debt, net
of $92,000 of associated unamortized discount at an approximate 23% yield to maturity. As of December 31, 2010 and December 31, 2009, $34.5 million and
$59.5 million of the Senior Notes, net of debt discount remained outstanding, respectively.
On February 1, 2011 our Board of Directors approved a $10 million increase to our previously-announced debt repurchase program. With this increase
we may repurchase up to $15 million of our
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