Overstock.com 2009 Annual Report Download - page 122

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Table of Contents
Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
5. ACQUISITION AND SUBSEQUENT DISCONTINUED OPERATIONS (Continued)
The following table is a summary of the Company's discontinued operations for the period ended April 25, 2007 (in thousands):
Year-to-date period
ended April 25, 2007
Sales $ 2,226
Cost of sales (650)
Gross profit 1,576
Sales and marketing (447)
Technology (60)
General and administrative (1,152)
Goodwill impairment (3,841)
Loss from discontinued operations $ (3,924)
In 2007, the Company completed the sale of OTravel.com to Castles Travel, Inc., an affiliate of Kinderhook Industries, LLC, and Castles Media
Company LLC, for $17.0 million. The Company received cash proceeds, net of cash transferred, of $9.9 million and two $3.0 million promissory notes. The
$3.0 million senior note matured three years from the closing date and bore interest, payable quarterly, of 4.0%, 10.0% and 14.0% per year in the first, second
and third years, respectively. The $3.0 million junior note matured five years from the closing date and bore interest of 8.0% per year, compounded annually,
and was payable in full at maturity.
On January 21, 2009, the Company entered into a Note Purchase Agreement to settle the senior and junior promissory notes to Castles Travel, Inc. for
approximately $1.3 million in cash and recognized a loss on the settlement of these notes and interest receivable of approximately $3.9 million during the year
ended December 31, 2008.
6. MARKETABLE SECURITIES
The Company's marketable securities are reported at fair value with the related unrealized gains and losses included in accumulated other comprehensive
income (loss), a component of stockholders' equity (deficit), net of any tax effect. Realized gains or losses on the sale of marketable securities are determined
using the specific-identification method and recognized in the statement of operations.
The Company evaluates its investments periodically for possible other-than-temporary impairment by reviewing factors such as the length of time and
extent to which fair value has been below cost basis, the financial condition of the issuer and the Company's ability and intent to hold the investment for a
period of time which may be sufficient for anticipated recovery of market value. The Company records an impairment charge to the extent that the carrying
value of its available-for-sale securities exceeds the estimated fair market value of the securities and the decline in value is determined to be other-than-
temporary. The Company recorded an "other than temporary" impairment of marketable securities of $300,000 and realized losses of $34,000 during the year
ended December 31, 2008. The Company had no marketable securities at December 31, 2009.
F-27