Overstock.com 2007 Annual Report Download - page 111

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Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
5. MARKETABLE SECURITIES
The Company's marketable securities are reported at fair value with the related unrealized gains and losses included in accumulated other comprehensive
income (loss), a component of shareholders' equity, net of any tax effect. Realized gains or losses on the sale of marketable securities are determined using the
specific-identification method. The Company evaluates its investments periodically for possible other-than-temporary impairment by reviewing factors such
as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and the Company's ability and intent to hold
the investment for a period of time which may be sufficient for anticipated recovery of market value. The Company records an impairment charge to the
extent that the carrying value of our available for sale securities exceeds the estimated fair market value of the securities and the decline in value is determined
to be other-than-temporary. The Company did not record any impairment charges related to other-than temporary decline in value of its marketable securities
for the years ending December 31, 2007 or 2006.
As of December 31, 2007, the Company's marketable securities consisted of U.S. agency securities, top tier commercial paper, and AAA-rated asset-
backed securities collateralized by automobile loans/leases and credit card receivables. All marketable securities are classified as available-for-sale securities.
The following table summarizes the Company's marketable security investments as of December 31, 2007 (in thousands):
Cost Net Unrealized Gains (Losses) Estimated Fair Market Value
Marketable securities:
U.S. Agency Securities $29,793 $ 23 $ 29,816
Commercial Paper 12,671 6 12,677
Asset-Backed Securities 3,495 12 3,507
Total available-for-sale investments $45,959 $ 41 $ 46,000
The components of realized gains and losses on sales of marketable securities for the years ended December 31, 2005, 2006 and 2007 were (in
thousands):
Years ended December 31,
2005 2006 2007
Gross gains $ — $2,141 $—
Gross losses (3,351) (56) —
Net realized gain (loss) on sales of marketable securities $(3,351) $2,085 $—
Derivative instruments
During the first quarter of 2005, the Company purchased $49.9 million of Foreign Corporate Securities ("Foreign Notes") which were scheduled to
mature for $50.0 million in cash in November 2006. The Foreign Notes did not have a stated interest rate, but were structured to return the entire principal
amount and a conditional coupon if held to maturity. The conditional coupon would provide a rate of return dependent on the performance of a "basket" of
eight Asian currencies against the U.S.
F-22