Overstock.com 2009 Annual Report Download - page 115

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Table of Contents
Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
2. ACCOUNTING POLICIES (Continued)
application is permitted. The Company is currently evaluating both the timing and the impact of the pending adoption of ASU 2009-13 on its consolidated
financial statements.
In January 2010, the FASB issued ASU 2010-6, Improving Disclosures About Fair Value Measurements, which requires reporting entities to make new
disclosures about recurring or nonrecurring fair-value measurements including significant transfers into and out of Level 1 and Level 2 fair-value
measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair- value measurements.
ASU 2010-6 is effective for annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which are effective for
annual periods beginning after December 15, 2010. The Company does not expect the adoption of ASU 2010-6 to have a material impact on its consolidated
financial statements.
Reclassifications
In the consolidated statement of operations the Company reclassified expense related to a third party technology provider from technology expense to
general to administrative expense. For the year ended December 31, 2008, the Company reclassified $1.5 million from technology expense to general to
administrative expense.
3. RESTATEMENT OF FINANCIAL STATEMENTS
On January 29, 2010, the Audit Committee of the Board of Directors concluded, based on the recommendation of management, that the Company would
restate (1) its consolidated financial statements for the year ended December 31, 2008 and (2) its quarterly consolidated financial statements for all interim
periods for the year ended December 31, 2008 within this Form 10-K to correct the following errors:
Accounting for amounts that the Company pays its drop ship fulfillment partners and an amount due from a vendor that went undiscovered for a
period of time. Specifically, these errors related to (1) amounts the Company paid to partners or deducted from partner payments related to return
processing services and product costs and (2) amounts the Company paid to a freight vendor based on incorrect invoices from the vendor. Once
discovered, the Company applied "gain contingency" accounting for the recovery of such amounts, which was an inappropriate accounting
treatment.
Amortization of the expense related to restricted stock units. Previously the expense was based on the actual three year vesting schedule, which
incorrectly understated the expense as compared to a three year straight line amortization.
The following additional adjustments were also included in this restatement:
Correction of certain amounts related to customer refunds and credits
Recognition of co-branded credit card bounty revenue and promotion expense over the estimated term of the credit card relationships. Previously
the revenue was incorrectly recognized when the card was issued.
Reduction in the restructuring accrual and correction of the related expense due to a 2008 sublease benefit which was previously excluded from
the accrual calculation and the accretion of interest expense related to the restructuring accrual, which was not previously recorded.
F-21
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