Overstock.com 2008 Annual Report Download - page 61

Table of Contents
Contractual Obligations and Commitments
The following table summarizes our contractual obligations as of December 31, 2008 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 2009 2010 2011 2012 2013 Thereafter Total
Long-term debt arrangements $ — $ — $ 67,500 $ — $ — $ — $ 67,500
Interest on convertible senior notes 2,530 2,530 2,319 — — — 7,379
Operating leases 8,060 8,652 8,989 8,868 8,325 15,036 57,930
Purchase obligations 6,506 700 508 — — — 7,714
Total contractual cash obligations $ 17,906 $ 11,882 $ 79,316 $ 8,868 $ 8,325 $ 15,036 $ 140,523
Amounts of Commitment Expiration Per Period
Other Commercial Commitments 2008 2009 2010 2011 2012 Thereafter Total
Letters of credit $ 2,200 $ — $ — $ — $ — $ — $ 2,200
Total commercial commitments $ 2,200 $ — $ — $ — $ — $ — $ 2,200
Purchase Obligations. The amount of purchase obligations shown above is based on assumptions regarding the legal
enforceability against us of purchase orders we had outstanding at December 31, 2008. Under different assumptions regarding our
rights to cancel our purchase orders or different assumptions regarding the enforceability of the purchase orders under applicable law,
the amount of purchase obligations shown in the table above would be less.
Long-Term Debt Arrangements and Interest. In November 2004, we completed an offering of $120.0 million of 3.75%
Convertible Senior Notes (the "Senior Notes"). Proceeds to us 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 amortized using the straight-line method which approximates
the interest method. We recorded amortization of discount and debt issuance costs related to this offering totaling $620,000, $417,000
and $344,000 during the years ended December 31, 2006, 2007 and 2008, respectively. 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 or, approximately 885,000 shares in aggregate (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 the
ownership of us). 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. Wilmington Trust Company currently serves as Trustee under the indenture.
Under the repurchase program discussed above, we retired $9.5 million of the Senior Notes during the quarter ended
September 30, 2008 for $6.6 million in cash, resulting in a gain of $2.8 million on early extinguishment of debt, net of $142,000 of
associated unamortized discount. As of December 31, 2008, $67.5 million of the Senior Notes remained outstanding.
Operating Leases
Computer equipment operating leases. We have two operating leases for certain computer equipment that expire in the first and
fourth quarters of 2010. It is expected that such leases will be renewed by exercising purchase options or replaced by leases of other
computer equipment.
Corporate office space. In July 2005, we leased approximately 154,000 rentable square feet in the Old Mill Corporate Center III
in Salt Lake City, Utah for a term of ten years. The total lease obligation over the remaining term of this lease is $30.4 million, of
which approximately $4.0 million is payable in the next twelve months. $8.0 million of the total lease obligation is offset by estimated
sublease payments related to restructuring, of which $1.0 million is anticipated to be received in the next twelve months (see Item 15
of Part IV, "Financial Statements"— Note 3—"Restructuring Expense").
Logistics and warehouse space. We currently lease 795,000 square feet for warehouse facilities in Utah under operating leases
which expire in August 2012 and August 2015.
On April, 8, 2008, we entered into a lease agreement with Natomas Meadows, LLC (the "Natomas Lease"). The Natomas Lease is
for a 686,865 square foot warehouse facility in Salt Lake City, Utah (the "New Warehouse"). The Natomas Lease provides that we