Overstock.com 2008 Annual Report Download - page 47

Table of Contents
Recent Accounting Pronouncements.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities ("SFAS
No. 159"). Under SFAS No. 159, companies may elect to measure certain financial instruments and certain other items at fair value.
The standard requires that unrealized gains and losses on items for which the fair value option has been elected be reported in
earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We adopted SFAS No. 159 on January 1,
2008; however, we did not elect to apply the fair value option to any financial instruments or other items upon adoption of SFAS
No. 159 during the year ended December 31, 2008. Therefore, the adoption of SFAS No. 159 did not impact our consolidated
financial position, results of operations or cash flows.
In December 2007, the FASB issued SFAS No. 141 (R),Business Combinations ("SFAS No. 141 (R)"), and SFAS No. 160,
Noncontrolling Interests in Consolidated Financial Statements ("SFAS No. 160"). SFAS No. 141 (R) requires an acquirer to measure
the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquired entity at their fair values on the
acquisition date, with goodwill being the excess value over the net identifiable assets acquired. SFAS No. 160 clarifies that a
noncontrolling interest in a subsidiary should be reported as equity in the consolidated financial statements. The calculation of
earnings per share will continue to be based on income amounts attributable to the parent. SFAS No. 141 (R) and SFAS No. 160 are
effective for financial statements issued for fiscal years beginning after December 15, 2008. Early adoption is prohibited. We do not
expect the adoption of SFAS No. 141 (R) or SFAS No. 160 will have a material impact our financial position and results of operations
or cash flows.
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities — an
amendment of FASB Statement No. 133 ("SFAS No. 161"). SFAS No. 161 requires enhanced disclosures about a company's derivative
and hedging activities, in particular: 1) how and why derivative instruments are utilized; 2) how derivative instruments and related
hedged items are accounted for under SFAS No. 133 and its related interpretations; and 3) how derivative instruments and related
hedged items affect a company's financial position, financial performance and cash flows. SFAS No. 161 is effective for financial
statements issued for fiscal years and interim periods beginning after November 15, 2008, with early adoption encouraged. We have
no derivative instruments. Therefore, we do not expect the adoption of SFAS No. 161 to impact our financial position and results of
operations or cash flows.
In April 2008, the FASB issued FSP No. 142-3, Determination of the Useful Life of Intangible Assets ("FSP No. 142-3"). FSP
No. 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful
life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets. FSP No. 142-3 is effective
for financial statements issued for fiscal years beginning after December 15, 2008. Early adoption is prohibited. We do not expect the
adoption of FSP No. 142-3 will have a material impact on our consolidated financial statements.
In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles ("SFAS No. 162").
The current GAAP hierarchy was established by the American Institute of Certified Public Accountants, and faced criticism because it
was directed to auditors rather than entities. The issuance of this statement corrects this and makes some other hierarchy changes. This
statement is effective 60 days following the Securities and Exchange Commission's approval of the Public Company Accounting
Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles. The adoption of SFAS No. 162 did not result in a change to our consolidated financial statements.
In May 2008, the FASB issued FASB Staff Position ("FSP") APB 14-1, Accounting for Convertible Debt Instruments That
May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) ("FSP APB 14-1"), which clarifies the accounting for
convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement. FSP APB 14-1 specifies
that an issuer of such instruments should separately account for the liability and equity components of the instruments in a manner that
reflect the issuer's non-convertible debt borrowing rate when interest costs are recognized in subsequent periods. FSP APB 14-1 is
effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those fiscal
years. We anticipate that the adoption of FSP APB 14-1 will not have a material impact on our consolidated financial statements.
We periodically review new accounting standards that are issued from time to time. Although some of these accounting standards
may be applicable to us, we have not identified any other new standards that we believe merit further discussion and we expect that
none would have a significant impact on our consolidated financial statements.
Executive Commentary
This executive commentary is intended to provide investors with a view of our business through the eyes of our management. As
an executive commentary, it necessarily focuses on selected aspects of our business. This executive commentary is intended as a
supplement to, but not a substitute for, the more detailed discussion of our business included elsewhere herein. Investors are cautioned
to read our entire "Management's Discussion and Analysis of Financial Condition and Results of Operations", as well as our interim
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