Overstock.com 2006 Annual Report Download - page 93

Download and view the complete annual report

Please find page 93 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

The stock options, warrants and convertible senior notes outstanding were not included in the computation of diluted earnings per
share because to do so would have been antidilutive. The number of shares of stock options outstanding at each year-end was 2.4
million shares, 1.3 million shares and 1.0 million shares for 2004, 2005 and 2006, respectively. As of December 31, 2006, the
Company had $77.0 million of convertible senior notes outstanding (see Note 13), which could potentially convert into 1.0 million
shares of common stock in the aggregate.
Recently issued accounting pronouncements
In March 2006, the Emerging Issue Task Force reached a consensus on Issue No. 06-03, How Taxes Collected from Customers
and Remitted to Government Authorities Should be Presented in the Income Statement (That Is, Gross versus Net Presentation), (EITF
No. 06-03). The Company is required to adopt the provisions of EITF No. 06-03 beginning its fiscal year 2007. The Company does
not expect the provisions of EITF No. 06-03 to have a material impact on its consolidated financial position, results of operations or
cash flows.
In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an Interpretation of
FASB Statement No. 109, (FIN 48). FIN 48 prescribes a comprehensive model for how a company should recognize, measure, present,
and disclose in its financial statements uncertain tax positions that it has taken or expects to take on a tax return. FIN 48 is effective for
us on January 1, 2007. The Company does not expect the provisions of FIN 48 to have a material impact on its consolidated financial
position, results of operations or cash flows.
In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108 (SAB 108). SAB 108
was issued to provide interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be
considered in quantifying a current year misstatement. The provisions of SAB 108 are effective for the Company for the December 31,
2006 year-end. The adoption of SAB 108 did not impact the Company's consolidated financial position, results of operations or cash
flows.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, (SFAS 157). SFAS 157 defines fair value,
establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value
measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value
measurements. SFAS 157 becomes effective for the Company on January 1, 2008. Upon adoption, the provisions of SFAS 157 are to
be applied prospectively with limited exceptions. The Company does not expect the provisions of SFAS 157 to have a material impact
on its consolidated financial position, results of operations or cash flows.
Reclassification
Certain balances of the prior years have been reclassified to conform to the current year's presentation. These reclassifications
had no effect on net loss or total assets.
3. STOCK OFFERINGS
In June 2004, the Company closed its second follow-on public offering, pursuant to which it sold 1.3 million shares of common
stock, with proceeds to the Company of approximately $37.9 million, net of $405,000 of issuance costs.
In November 2004, the Company closed another follow-on public offering, pursuant to which it sold 1.4 million shares of
common stock, with proceeds to the Company of approximately $75.2 million, net of $215,000 of issuance costs. Concurrently in
November 2004, the Company issued convertible senior notes
F-15