Overstock.com 2006 Annual Report Download - page 92

Download and view the complete annual report

Please find page 92 of the 2006 Overstock.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 122

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122

foreign currency translation adjustments are recorded as a separate component of stockholders' equity in the consolidated balance
sheets as part of accumulated other comprehensive income (loss). Transaction gains and losses are included in other income (expense)
in the consolidated financial statements and have not been significant for any periods presented.
Derivative instruments
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities requires companies to recognize their derivative
instruments, including certain derivative instruments embedded in other contracts, as either assets or liabilities in the balance sheet at
fair value. The accounting for changes in the fair value of a derivative instrument depends on whether the instrument has been
designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative
instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the
exposure being hedged, as a fair value hedge, a cash flow hedge or a hedge of a net investment in an international operation. For
derivatives designated as hedges, the changes in fair value are recorded in the balance sheet as an item in other comprehensive
income. Changes in the fair value of derivatives not designated as hedges are recorded in the statement of operations. As of
December 31, 2005 and 2006, the Company had not designated any derivative instruments as hedges.
Earnings (loss) per share
In accordance with SFAS 128, Earnings per share, basic earnings (loss) per share is computed by dividing net income (loss)
attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings
(loss) per share is computed by dividing net income (loss) attributable to common shares for the period by the weighted average
number of common and potential common shares outstanding during the period. Potential common shares, composed of incremental
common shares issuable upon the exercise of stock options, warrants and convertible senior notes, are included in the calculation of
diluted net loss per share to the extent such shares are dilutive.
The following table sets forth the computation of basic and diluted earnings (loss) per share for the periods indicated (in
thousands):
Year ended December 31,
2004 2005 2006
Loss from continuing operations $ (4,540) $ (22,347) $ (94,884)
Deemed dividend related to redeemable common stock (188)(185)(99)
Loss from continuing operations attributable to common shares (4,728) (22,532) (94,983)
Loss from discontinued operations — (2,571)(6,882)
Net loss attributable to common shares $ (4,728) $ (25,103) $ (101,865)
Weighted average common shares outstanding—basic 17,846 19,429 20,332
Effective of dilutive securities:
Stock options and warrants — — —
Convertible senior notes — — —
Weighted average common shares outstanding—diluted 17,846 19,429 20,332
Net loss per common share—basic and diluted:
Loss from continuing operations $ (0.26) $ (1.16) $ (4.67)
Loss from discontinued operations $ — $ (0.13) $ (0.34)
Net loss per common share—basic and diluted $ (0.26)$ (1.29)$ (5.01)
F-14