Overstock.com 2012 Annual Report Download - page 103

Table of Contents
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

totaled $55.6 million, $52.5 million and $53.2 million during the years ended December 31, 2012, 2011 and 2010, respectively. Prepaid advertising,
which consists primarily of prepaid advertising airtime, (included in Prepaids and other assets in the accompanying consolidated balance sheets) was
$1.2 million and $1.4 million at December 31, 2012 and 2011, respectively.
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We measure compensation expense for all outstanding unvested share-based awards at fair value on date of grant and recognize compensation
expense over the service period for awards expected to vest on a straight line basis. The estimation of stock awards that will ultimately vest requires
judgment, and to the extent actual results differ from estimates, such amounts will be recorded as an adjustment in the period estimates are revised. We
consider many factors when estimating expected forfeitures, including types of awards, and historical experience. Actual results may differ substantially
from these estimates (see Note 17—Stock-Based Awards).

In the normal course of business, we are involved in legal proceedings and other potential loss contingencies. We accrue a liability for such matters
when it is probable that a loss has been incurred and the amount can be reasonably estimated. When only a range of probable loss can be estimated, the
most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum
amount in the range is accrued. We expense legal fees as incurred.
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Restructuring expenses are primarily comprised of lease termination costs. ASC Topic 420, 
 requires that when an entity ceases using a property that is leased under an operating lease before the end of the contractual term, the
termination costs should be recognized and measured at fair value when the entity ceases using the facility. Key assumptions in determining the
restructuring expenses include the terms that may be negotiated to exit certain contractual obligations (see Note 3—Restructuring Expense).
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Income taxes are accounted for under the asset and liability method. Deferred income taxes arise from temporary differences between the tax and
financial statement recognition of revenue and expenses. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which
they arise, we consider all available positive and negative evidence, including projected future taxable income, scheduled reversals of our deferred tax
liabilities, tax planning strategies and results of recent operations.
At December 31, 2012 and December 31, 2011, we have a full valuation allowance against our deferred tax assets, net of expected reversals of
existing deferred tax liabilities, as we believe it is more likely than not that these benefits will not be realized. Significant judgment is required in making
this assessment, and it is very difficult to predict when our assessment may conclude that the remaining portion of the deferred tax assets is realizable.
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