Overstock.com 2005 Annual Report Download - page 58

the Company's board of directors or the termination of trading of our stock) meeting certain conditions, holders of the Senior Notes
may require us to repurchase for cash all or part of their notes at 100% of the principal amount plus accrued and unpaid interest.
In 2005, under the Share Repurchase Program discussed below, we retired $43.0 million of 3.75% Convertible Senior Notes (the
"Senior Notes"), which were due on December 1, 2011 for $35.7 million in cash. Interest on the notes is payable on June 1 and
December 1 of each year. As a result of the note retirements in June and November, we recognized a gain of $6.2 million, net of the
associated unamortized discount of $1.2 million for the year ended December 31, 2005. As of December 31, 2005, $74.9 million of
Senior Notes remain outstanding.
Lease and Purchase Obligations
The lease obligations include our obligations under a ten-year lease agreement we entered in December 2004 for approximately
154,000 square feet of office space in Salt Lake City. We took possession of the new office space in July of 2005, and terminated our
lease obligations under our previous office lease agreements at the same time. The total lease obligation over the ten-year term of the
new lease is $39.6 million, of which approximately $3.5 million will be payable in 2006. In connection with the preparation of the
new office space, we have agreed to provide a letter of credit for $500,000 to provide funds for the removal of the improvements upon
termination of the new sublease and have also agreed to pay approximately $2.0 million for leasehold improvements. We paid almost
the entire amount for leasehold improvements during 2005.
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, 2005. 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.
Borrowings
In December 2004, we replaced our senior secured credit facility by amending a facility we had with Wells Fargo Bank, National
Association. On October 18, 2005 we entered into a Sixth Amendment (the "Sixth Amendment") which increased the aggregate
amount available under the credit facility from $20 million to $30 million. The Sixth Amendment also eliminated the requirement that
the Company maintain specified cash balances with Wells Fargo as a condition to the availability of advances under the facility, and
substituted collateral consisting of foreign bond securities owned by the Company in an aggregate principal amount of $50.0 million
to secure the Company's obligations under the facility. The Sixth Amendment includes a $15.0 million sub-limit which we use to
obtain letters of credit to support inventory purchases. We have an option to renew the Amended Credit Agreement annually. The
Sixth Amendment increased the interest rate on fixed rate advances under the credit facility to 1.35% above LIBOR on the first day of
each fixed rate term under the credit facility the interest rate.
The agreement governing the facility requires us to comply with certain covenants, including restrictions on mergers, business
combinations or transfers of assets. We were in compliance with these covenants at December 31, 2005. At December 31, 2005, $0
was outstanding under the facility and $9.5 million in letters of credit was outstanding.
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.
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