Overstock.com 2008 Annual Report Download - page 107

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Table of Contents
16. STOCK OFFERINGS
During 2006, the Company closed two offerings under an existing "shelf" registration statement, pursuant to which it sold
1.0 million shares of common stock in May and 2.7 million shares of common stock in December, with proceeds to the Company of
approximately $25.0 million and $39.4 million, respectively, net of $594,000 of issuance costs.
There were no stock offerings during the years ended December 31, 2007 and 2008.
17. STOCK AND DEBT REPURCHASE PROGRAM
On January 14, 2008, the Company's Board of Directors authorized a repurchase program that allowed the Company to purchase
up to $20.0 million of its common stock and or its 3.75% Senior Convertible Notes due 2011 ("Senior Notes") through December 31,
2009. Under this repurchase program, the Company repurchased approximately 1.2 million shares of its common stock in open market
purchases for $13.4 million as of December 31, 2008.
In addition, during the year ended 2008, the Company retired $9.5 million of the Senior Notes for $6.6 million in cash. As a
result of the Senior Notes retirements, the Company recognized a gain of $2.8 million, net of the associated unamortized discount of
$142,000. As of December 31, 2008, $67.5 million of Senior Notes remain outstanding. The Company had fully utilized this
authorized $20.0 million repurchase program as of December 31, 2008.
On February 17, 2009 the Board of Directors of Overstock.com, Inc. approved a debt repurchase program that authorizes the
Company to utilize up to $20.0 million to repurchase a portion of its 3.75% Senior Notes. Under this repurchase program, the
Company retired $4.9 million of the Senior Notes for $3.0 million in cash. As a result of the Senior Notes retirements, the Company
expects to recognize a future gain of $1.9 million, net of the associated unamortized discount of $63,000 for this transaction.
18. STOCK BASED AWARDS
Adoption of SFAS 123(R)
As of January 1, 2006, the Company adopted SFAS No. 123(R) using the modified prospective method, which requires
measurement of compensation cost for all stock-based awards at fair value on date of grant and recognition of compensation over the
service period for awards expected to vest. The fair value of stock options is determined using the Black-Scholes-Merton ("BSM")
valuation model, which is consistent with our valuation techniques previously utilized for options in footnote disclosures required
under SFAS No. 123. Such value is recognized as expense over the service period, net of estimated forfeitures, using the straight-line
method under SFAS 123(R).
The adoption of SFAS No. 123(R) did not result in a cumulative benefit from accounting change, which reflects the net
cumulative impact of estimating future forfeitures in the determination of period expense, rather than recording forfeitures when they
occur as previously permitted, as we did not have unvested employee stock awards for which compensation expense was recognized
prior to adoption of SFAS No. 123(R).
Prior to the adoption of SFAS No. 123(R), cash retained as a result of tax deductions relating to stock-based compensation was
presented in operating cash flows, along with other tax cash flows, in accordance with the provisions of the Emerging Issues Task
Force ("EITF") Issue No. 00-15, Classification in the Statement of Cash Flows of the Income Tax Benefit Received by a Company
upon Exercise of a Nonqualified Employee Stock Option. SFAS No. 123(R) supersedes EITF 00-15, amends SFAS No. 95,Statement
of Cash Flows, and requires tax benefits relating to excess stock-based compensation deductions to be prospectively presented in the
statement of cash flows as financing cash inflows. As of the adoption of SFAS No. 123(R), we had fully reserved against any tax
benefits resulting from stock-based compensation deductions in excess of amounts reported for financial reporting purposes.
On March 29, 2005, the SEC published SAB No. 107, which provides the Staff's views on a variety of matters relating to stock-
based payments. SAB No. 107 requires stock-based compensation be classified in the same expense line items as cash compensation.
The Company has reclassified stock-based compensation from prior periods to correspond to current period presentation within the
same operating expense line items as cash compensation paid to employees.
The application of SFAS No. 123(R) had the following effect on the year ended December 31, 2006 reported amounts relative to
amounts that would have been reported using the intrinsic value method under previous accounting (in thousands, except per share
amounts):
Year ended
December 31, 2006
Operating loss $ (4,120)
Net loss $ (4,120)
Net loss per common share—basic and diluted $ (0.20)
F-27