Overstock.com 2007 Annual Report Download - page 78

Convertible Notes due 2011 through December 31, 2009. Under this repurchase program, we have repurchased approximately 1.1 million shares of our
common stock in open market transactions for $12.0 million through March 14, 2008. None of the purchases were made during the fourth quarter of 2007.
Shelf Registration
In April 2005, we filed a registration statement with the Securities and Exchange Commission using a "shelf" registration or continuous offering process.
Under this shelf process, we may, from time to time, sell any or all of the securities described in the prospectus in one or more offerings up to a total dollar
amount of $500.0 million. On May 1, 2006, we issued approximately 1,042,000 shares of common stock for net proceeds of approximately $25.0 million.
Additionally, on December 12, 2006, we issued approximately 2,734,000 shares for net proceeds of approximately $39.4 million. We did not issue any shares
of common stock under the shelf registration statement during fiscal 2007.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not use derivative financial instruments in our investment portfolio and have no foreign exchange contracts. Our financial instruments consist of
cash and cash equivalents, marketable securities, trade accounts and contracts receivable, accounts payable and long-term obligations. We consider
investments in highly-liquid instruments with a remaining maturity of 90 days or less at the date of purchase to be cash equivalents.
Our exposure to market risk for changes in interest rates relates primarily to our short-term investments and short-term obligations; thus, fluctuations in
interest rates would not have a material impact on the fair value of these securities. However, the fair values of our investments may be subject to fluctuations
due to volatility of the stock market in general, investment-specific circumstances, and changes in general economic conditions.
At December 31, 2007, we had $101.4 million in cash and cash equivalents and $46.0 million in marketable securities. Hypothetically, an increase or
decrease in interest rates of one hundred basis points would have an estimated impact of $1.5 million on our earnings or loss, or the fair market value or cash
flows of these instruments. Our cash, cash equivalents and marketable securities consisted of U.S. agency securities, money market funds, top tier commercial
paper, and AAA-rated asset-backed securities collateralized by automobile loans/leases and credit card receivables.
At December 31, 2007, we had approximately $77.0 million of convertible senior notes outstanding which bear interest at a fixed rate of 3.75%. In
addition, at December 31, 2007, there were no borrowings outstanding under our lines of credit and letters of credit totaling $2.8 million were outstanding
under our credit facilities.
The fair value of the convertible senior notes is sensitive to interest rate changes. Interest rate changes would result in increases or decreases in the fair
value of the convertible senior notes, due to differences between market interest rates and rates in effect at the inception of the obligation. Unless we elect to
repurchase our convertible senior notes in the open market, changes in the fair value of convertible senior notes have no impact on our cash flows or
consolidated financial statements. The estimated fair value of our 3.75% Convertible Senior Notes as of December 31, 2007 was $60.0 million.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data required by this item are included in Part IV, Item 15 of this Form 10-K and are presented beginning on
page F-1.
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