Overstock.com 2003 Annual Report Download - page 33

Payments Due by Period
(in thousands)
Contractual Obligations Total
Less than
1 Year 1-3 Years 4-5 Years
After 5
years
Long-term debt arrangements $ — $ — $ — $ — $ —
Capital lease obligations 177 85 85 7 —
Operating leases 3,748 1,575 2,108 65 —
Purchase obligations 8,038 8,038 — — —
Total contractual cash obligations $11,963 $ 9,698 $ 2,193 $ 72 $ —
Amounts of Commitment Expiration Per Period
(in thousands)
Other Commercial Commitments
Total
Amounts
Committed
Less than
Year 1 1-3 Years 4-5 Years
Over 5
years
Letters of credit $ 1,882 $ 1,882 $ — $ — $ —
Redeemable common stock 2,978 — 2,978 — —
Total commercial commitments $ 4,860 $ 1,882 $ 2,978 $ — $ —
The amount of purchase obligations shown is based on assumptions regarding the legal enforceability against us of purchase orders we had outstanding
at December 31, 2003. Under different assumptions regarding our rights to cancel our purchase orders or different assumptions regarding the enforceability of
the purchase orders under applicable law, the amount of purchase obligations shown in the table above would be less.
The estimated amount of redeemable common stock is based solely on the statutes of limitations of the various states in which stockholders may have
rescission rights and may not reflect the actual results. The stock is not redeemable by its terms. We do not have any unconditional purchase obligations, other
long-term obligations, guarantees, standby repurchase obligations or other commercial commitments.
We have a $3.5 million revolving letter of credit facility, which expires June 30, 2005, which we use to obtain letters of credit supporting our inventory
purchases. At December 31, 2003 the issuing bank or an affiliate of the bank had letters of credit totaling $1.9 million outstanding under this facility.
However, we have no liability for this amount except to the extent, if any, that a beneficiary of any of the outstanding letters of credit draws upon a letter of
credit. In evaluating our contractual obligations and commitments, investors should understand that the amount shown above under letters of credit is
duplicative of a portion of the amount shown above under purchase obligations, because we have no
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actual liability in connection with the letter of credit facility (other than for commitment fees and similar items) except to the extent that we fail to pay a
similar amount included above in purchase obligations.
We believe that the cash and marketable securities currently on hand will be sufficient to continue operations for at least the next twelve months. While
we anticipate that, beyond the next twelve months, our cash flows from operations will be sufficient to fund our operational requirements, we may require
additional financing. However, there can be no assurance that if additional financing is necessary it will be available, or, if available, that such financing can
be obtained on satisfactory terms. Failure to generate sufficient revenues or raise additional capital could have a material adverse effect on our ability to
continue as a going concern and to achieve our intended business objectives. Any projections of future cash needs and cash flows are subject to substantial
uncertainty. See "Factors that May Affect Future Results."
Seasonality
Financial results for Internet retailers are generally seasonal. Based upon the Company's historical experience, increased revenues typically occur during
the fourth quarter because of the Christmas 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 the Company's results of operations in the future. The following table reflects the Company's revenues for each of the quarters available
since 2000 (in thousands):
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2003 $29,164 $28,833 $57,788* $123,160*
2002 12,067 14,380 $23,808 $ 41,529
2001 9,578 7,407 8,744 14,274
2000 2,257 3,795 4,339 15,132
Note that the revenue for the third and fourth quarters of 2003 reflect the change in Company policy in which sales by fulfillment partners are now
recorded "gross" instead of "net" as in prior quarters.
Factors That May Affect Future Results
Any investment in our common stock involves a high degree of risk. Investors should consider carefully the risks and uncertainties, and all other
information in this Form 10-K before deciding whether to purchase or hold our common stock. Additional risks and uncertainties not currently known to us or
that we currently deem immaterial may also become important factors that may harm our business.
*