Overstock.com 2009 Annual Report Download - page 112

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Table of Contents
Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
2. ACCOUNTING POLICIES (Continued)
Stock-based compensation
The Company measures compensation expense for all outstanding unvested share-based awards at fair value on date of grant and recognizes
compensation expense over the service period for awards expected to vest on a straight line basis. The estimation of stock awards that will ultimately vest
requires judgment, and to the extent actual results differ from estimates, such amounts will be recorded as an adjustment in the period estimates are revised.
Management considers many factors when estimating expected forfeitures, including types of awards and historical experience. Actual results may differ
substantially from these estimates (see "Note 20—Stock Based Awards").
Loss contingencies
In the normal course of business, the Company is involved in legal proceedings and other potential loss contingencies. The Company accrues a liability
for such matters when it is probable that a loss has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be
established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the
minimum amount in the range is accrued.
Restructuring
Restructuring expenses are primarily comprised of lease termination costs. ASC Topic 420, Exit or Disposal Cost Obligations, requires that when an
entity ceases using a property that is leased under an operating lease before the end of its term contract, the termination costs should be recognized and
measured at fair value when the entity ceases using the facility. Key assumptions in determining the restructuring expenses include the terms that may be
negotiated to exit certain contractual obligations (see "Note 4—Restructuring Expense").
F-18