Overstock.com 2007 Annual Report Download - page 74

financing can be obtained on satisfactory terms. Failure to generate sufficient revenues, profits or to raise additional capital could have a material adverse
effect on our ability to continue as a going concern and to achieve our intended business objectives. Any projections of future cash needs and cash flows are
subject to substantial uncertainty.
Contractual Obligations and Commitments. The following table summarizes our contractual obligations as of December 31, 2007 and the effect such
obligations and commitments are expected to have on our liquidity and cash flow in future periods (in thousands):
Payments Due by Period
Contractual Obligations 2008 2009 2010 2011 2012 Thereafter Total
Long-term debt arrangements $ — $ — $ — $77,000 $ — $ — $ 77,000
Interest on convertible senior notes 2,888 2,888 2,888 2,647 — — 11,311
Capital lease obligations 4,086 — — — — — 4,086
Operating leases 7,647 6,238 5,987 5,803 5,526 11,196 42,397
Purchase obligations 12,699 — — — — — 12,699
Line of credit — — — — — — —
Total contractual cash obligations $27,320 $9,126 $8,875 $85,450 $5,526 $ 11,196 $147,493
Amounts of Commitment Expiration Per Period
Other Commercial Commitments 2008 2009 2010 2011 2012 Thereafter Total
Letters of credit $ 2,805 $ — $ — $ — $ — $ — $ 2,805
Total commercial commitments $ 2,805 $ — $ — $ — $ — $ — $ 2,805
3.75% Convertible Senior Notes
In November 2004, we completed an offering of $120.0 million of 3.75% Convertible Senior Notes (the "Senior Notes"). Interest on the Senior Notes is
payable semi-annually on June 1 and December 1 of each year. The Senior Notes mature on December 1, 2011 and are unsecured and rank equally in right of
payment with all existing and future unsecured, unsubordinated debt and senior in right of payment to any existing and future subordinated indebtedness. The
Senior Notes are convertible at any time prior to maturity into our common stock at the option of the note holders at a conversion price of $76.23 per share
(subject to adjustment in certain events, including stock splits, dividends and other distributions and certain repurchases of our stock, as well as certain
fundamental changes in our ownership).
Beginning December 1, 2009, we have the right to redeem the Senior Notes, in whole or in part, for cash at 100% of the principal amount plus accrued
and unpaid interest. Upon the occurrence of a fundamental change (including the acquisition of a majority interest in us, certain changes in our board of
directors or the termination of trading of our stock) meeting certain conditions, holders of the Senior Notes may require us to repurchase for cash all or part of
their notes at 100% of the principal amount plus accrued and unpaid interest.
The indenture governing the Senior Notes requires us to comply with certain affirmative covenants, including making principal and interest payments
when due, maintaining our corporate existence and properties, and paying taxes and other claims in a timely manner. We were in compliance with these
covenants at December 31, 2007.
In 2005, under the Share Repurchase Program discussed below, we retired $43.0 million of the Senior Notes for $35.7 million in cash. As a result of the
note retirements, we recognized a gain of $6.2 million, net of the associated unamortized discount of $1.2 million for the year ended December 31, 2005. As
of December 31, 2007, $77.0 million of Senior Notes and unamortized debt discount of $1.4 million remain outstanding.
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