Overstock.com 2005 Annual Report Download - page 96

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Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
10. BORROWINGS (Continued)
Future minimum lease payments under capital leases are as follows (in thousands):
Year Ending December 31,
2006 $ 7,249
2007 3,264
2007 7
Total minimum lease payments 10,520
Less: amount representing interest (779)
Present value of capital lease obligations 9,741
Less: current portion (6,683)
Capital lease obligations, non-current $ 3,058
11. 3.75% CONVERTIBLE SENIOR NOTES
In November 2004, the Company completed an offering of $120.0 million of 3.75% Convertible Senior Notes (the "Senior
Notes"). This includes $20.0 million of additional Senior Notes issued to the initial purchaser upon exercise of its 30-day purchase
option to cover over-allotments. Proceeds to the Company were $116.2 million, net of $3.8 million of initial purchaser's discount and
debt issuance costs. The discount and debt issuance costs are being amortized using the straight-line method which approximates the
interest method. During 2004 and 2005, the Company recorded amortization of discount and debt issuance costs related to this
offering totaling $52,000 and $620,000. Interest on the Senior Notes is payable semi-annually on June 1 and December 1 of each year,
beginning June 1, 2005. The Senior Notes mature on December 1, 2011 and are unsecured and rank equally in right of payment with
all existing and future unsecured, unsubordinated debt and senior in right of payment to any existing and future subordinated
indebtedness.
The Senior Notes are convertible at any time prior to maturity into the Company's common stock at the option of the note holders
at a conversion price of $76.23 per share or approximately 1.6 million shares in aggregate (subject to adjustment in certain events,
including stock splits, dividends and other distributions and certain repurchases of the Company's stock, as well as certain
fundamental changes in the ownership of the Company). Beginning December 1, 2009, the Company has the right to redeem the
Senior Notes, in whole or in part, for cash at 100% of the principal amount plus accrued and unpaid interest. Upon the occurrence of a
fundamental change (including the acquisition of a majority interest in the Company, certain changes in the Company's board of
directors or the termination of trading of the Company's stock) meeting certain conditions, holders of the Senior Notes may require the
Company to repurchase for cash all or part of their notes at 100% of the principal amount plus accrued and unpaid interest.
The indenture governing the Senior Notes requires the Company to comply with certain affirmative covenants, including making
principal and interest payments when due, maintaining our corporate existence and properties, and paying taxes and other claims in a
timely manner. The Company was in compliance with these covenants at December 31, 2005.
In June and November 2005, under the Share Repurchase Program (see Note 15), the Company retired $33.0 million and $10.0
million of its 3.75% Convertible Senior Notes (the "Senior Notes"), which were due on December 1, 2011 for $27.9 million and $7.8
million in cash for each respective retirement. As a result of the note retirements in June and November, we recognized a gain of $6.2
million, net of the
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