Overstock.com 2005 Annual Report Download - page 97

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Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
11. 3.75% CONVERTIBLE SENIOR NOTES (Continued)
associated unamortized discount of $1.2 million for the year ended December 31, 2005. As of December 31, 2005, $74.9 million of
the Senior Notes remained outstanding.
12. COMMITMENTS AND CONTINGENCIES
Commitments
Through July 2005, the Company leased 43,000 square feet of office space under an operating lease which was originally
scheduled to expire in January 2007. However, effective July 2005 this lease was terminated and replaced with a lease for a new office
building in the Old Mill Corporate Center III in Salt Lake City, Utah. Pursuant to this agreement, the Company began leasing
approximately 154,000 rentable square feet for a term of ten years beginning July 2005. In February 2005, the Company and Old Mill
Corporate Center III, LLC (the "Lessor") entered into a Tenant Improvement Agreement (the "OMIII Agreement") relating to the
office building. The OMIII Agreement sets forth the terms on which the Company will pay the costs of certain improvements to the
leased office space. The amount of the costs is estimated to be approximately $2.0 million. The OMIII Agreement requires the
Company to reimburse the Lessor for the amount of the costs within thirty days after presentation of invoices or written requests for
reimbursement. The OMIII Agreement also requires the Company to provide either a cash deposit or a letter of credit in the amount of
$500,000 to the Lessor to provide funds for the removal of the improvements upon the termination of the lease. The Company issued a
letter of credit for $500,000 to the Lessor.
The Company leases 480,000 square feet for its warehouse facilities in Utah under operating leases which expire in August 2012.
In June 2005, the Company entered into a non-cancelable operating lease for certain computer equipment expiring in the next
three years. It is expected that such leases will be renewed by exercising purchase options or replaced by leases of other computer
equipment.
Minimum future payments under these leases are as follows (in thousands):
Year Ending December 31,
2006 $ 6,035
2007 6,656
2008 7,089
2009 7,650
2010 7,864
Thereafter 36,166
$ 71,460
Rental expense for operating leases totaled $2.0 million, $1.9 million and $4.0 million for the years ended December 31, 2003,
2004 and 2005, respectively.
Pledged Securities
The Company is required to pledge its foreign derivatives as collateral for a $30.0 million revolving line of credit (see Note 10).
F-27