Overstock.com 2004 Annual Report Download - page 53

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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
2004 $82,078 $87,792 $103,444 $221,321
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 total revenue since the third quarter of 2003 reflects the change in our policy in which sales by fulfillment partners are recorded "gross"
instead of "net" as in prior quarters.
Factors That May Affect Future Results
Any investment in our securities involves a high degree of risk. Investors should consider carefully the risks and uncertainties described herein, and all
other information in this Form 10-K before deciding whether to purchase or hold our securities. 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not use derivative financial instruments in our investment portfolio and have no foreign exchange contracts. Our financial instruments consist of
cash and cash equivalents, marketable securities, trade accounts and contracts receivable, accounts payable and long-term obligations. We consider
investments in highly-liquid instruments purchased with a remaining maturity of 90 days or less at the date of purchase to be cash equivalents. Our exposure
to market risk for changes in interest rates relates primarily to our short-term investments and short-term obligations; thus, fluctuations in interest rates would
not have a material impact on the fair value of these securities.
At December 31, 2004, we had $198.7 million in cash and cash equivalents and $88.8 million in marketable securities. A hypothetical increase or
decrease in interest rates of one hundred basis points would have an estimated impact of approximately $2.9 million on our earnings or loss, or the fair market
value or cash flows of these instruments.
At December 31, 2004, we had approximately $120.0 million of convertible senior notes outstanding which bear interest at a fixed rate of 3.75%. In
addition, at December 31, 2004, there were no borrowings outstanding under our line of credit and letters of credit totaling $8.4 million were outstanding
under our credit facility.
The fair value of the convertible senior notes is sensitive to interest rate changes. Interest rate changes would result in increases or decreases in the fair
value of the convertible senior notes, due to differences between market interest rates and rates in effect at the inception of the obligation. Unless we elect to
repurchase our convertible senior notes in the open market, changes in the fair value of convertible senior notes have no impact on our cash flows or
consolidated financial statements. The estimated fair value of the convertible senior notes was $120.0 million at December 31, 2004.
In January 2005, our Board of Directors authorized a stock repurchase program under which we can repurchase up to $50.0 million of our common stock
through December 31, 2007. Under the program, shares may be purchased as determined by management, from time to time and within certain guidelines, in
the open market or in privately negotiated transactions, including privately negotiated structured stock repurchase transactions and through transactions in the
options markets. Depending
49
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