Overstock.com 2009 Annual Report Download - page 128

Table of Contents
Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
15. BORROWINGS (Continued)
At December 31, 2009, no amounts were outstanding under the Financing Agreement, and letters of credit totaling $2.6 million were issued on behalf of
the Company collateralized by compensating cash balances held at U.S. Bank, which are included in Restricted cash in the accompanying consolidated
balance sheets.
U.S. Bank Commercial Purchasing Card Agreement
On December 16, 2009, the Company entered into a commercial purchasing card agreement (the "Purchasing Card") with U.S. Bank National
Association ("U.S. Bank"). The Company uses the Purchasing Card for business purpose purchasing and must pay it in full each month. At December 31,
2009, no amount was outstanding and $5.0 million was available under the Purchasing Card.
3.75% Convertible Senior Notes
In November 2004, the Company completed an offering of $120.0 million of 3.75% Convertible Senior Notes due 2011 (the "Senior Notes"). Proceeds
to the Company 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 effective interest rate method. For the years ended December 31, 2007, 2008 and 2009,
respectively, the Company recorded amortization of discount and debt issuance costs totaling $334,000, $334,000 and $331,000. 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 the Company's common stock at the option of the note holders at a conversion price of
$76.23 per share or, approximately 787,000 shares in aggregate (subject to adjustment in certain events, including stock splits, dividends and other
distributions and certain repurchases of the Company's stock, as well as certain fundamental changes in the ownership of the Company). Beginning on or after
December 31, 2009, the Company has 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 the Company, certain changes in the
Company's Board of Directors or the termination of trading of the Company's stock) meeting certain conditions, holders of the Senior Notes may require the
Company 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 the Company to comply with certain affirmative covenants, including making principal and interest
payments when due, maintaining the Company's corporate existence and properties, and paying taxes and other claims in a timely manner.
On January 14, 2008 and February 17, 2009, the Board of Directors approved two debt repurchase programs that authorized the Company to use up to an
additional $20.0 million in cash under each program to repurchase a portion of its Senior Notes. The Company retired $9.5 million of the Senior Notes during
the third quarter of 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. For the year ended December 31, 2009, the Company retired a total of $7.4 million of its Senior Notes for $4.6 million in cash and
recorded a $2.8 million gain, net of amortization of debt discount of $92,000 (see Note 19—
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