Overstock.com 2007 Annual Report Download - page 115

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Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
10. BORROWINGS (Continued)
amount of its eligible inventory and receivables. The Company's obligations under the WFRF Agreement and all related agreements are collateralized by all
or substantially all of the Company's and its subsidiaries' assets. The Company's obligations under the WFRF Agreement are cross-collateralized with its
assets pledged under its $30.0 million credit facility with Wells Fargo Bank, N.A. The WFRF Agreement contains standard default provisions and expires on
December 12, 2008. The conditions to the Company's use of the facility include a 45-day advance notice requirement.
Advances under the WFRF Agreement bear interest at either (a) the rate announced, from time to time, within Wells Fargo Bank, N.A. at its principal
office in San Francisco as its "prime rate" or (b) a rate based on LIBOR plus a varying percentage between 1.25% and 1.75%; however, the annual interest
rate on advances under the WFRF Agreement will be at least 3.50%. The WFRF Agreement includes affirmative covenants as well as negative covenants that
prohibit a variety of actions without the lender's approval, including covenants that limit the Company's ability to (a) incur or guarantee debt, (b) create liens,
(c) enter into any merger, recapitalization or similar transaction or purchase all or substantially all of the assets or stock of another person, (d) sell assets,
(e) change its name or the name of any of its subsidiaries, (f) make certain changes to its business, (g) optionally prepay, acquire or refinance indebtedness,
(h) consign inventory, (i) pay dividends on, or purchase, acquire or redeem shares of, its capital stock, (j) change its method of accounting, (k) make
investments, (l) enter into transactions with affiliates, or (m) store any of its inventory or equipment with third parties. The Company was in compliance with
these covenants as of December 31, 2007. At December 31, 2007, no amounts were outstanding and availability under the WFRF Agreement was
$9.0 million.
Capital leases
The Company leases certain software and computer equipment under three non-cancelable capital leases that expire at various dates through 2008.
Software and equipment relating to the capital leases totaled $19.8 million at December 31, 2006 and 2007, with accumulated amortization of
$12.4 million and $19.1 million at those respective dates. Depreciation of assets recorded under capital leases was $7.2 million and $6.5 million at
December 31, 2006 and 2007, respectively.
Future minimum lease payments under capital leases are as follows (in thousands):
Twelve months ending December 31,
2008 $ 4,086
Less: amount representing interest (290)
Present value of capital lease obligations 3,796
Less: current portion (3,796)
Capital lease obligations, non-current $ —
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"). 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
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