Overstock.com 2009 Annual Report Download - page 81

Table of Contents
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 a total $7.4 million of our Senior Notes for $4.6 million in cash and recorded a $2.8 million
gain, net of amortization of debt discount of $92,000 for the year ended December 31, 2009 (see Item 15 of Part IV, "Financial Statements"—Note 19
—"Stock and Debt Repurchase Program"). As of December 31, 2009, a face amount of $60.0 million of the Senior Notes remain outstanding with a carrying
amount of $59.5 million and $528,000 of debt discount.
Off-balance sheet arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that would be material to
investors.
Non-GAAP financial measures
Regulation G, Conditions for Use of Non-GAAP Financial Measures, and other SEC regulations regulate the disclosure of certain non-GAAP financial
information.
Contribution and Contribution Margin. Contribution (a non-GAAP financial measure) (which we reconcile to "Gross profit" in our statement of
operations) consists of gross profit less sales and marketing expense and reflects an additional way of viewing our results. Contribution Margin is
Contribution as a percentage of revenues. When viewed with our GAAP gross profit less sales and marketing expenses, we believe Contribution and
Contribution margin provides management and users of the financial statements information about our ability to cover our fixed operating costs, such as
technology and general and administrative expenses. Contribution and Contribution Margin are used in addition to and in conjunction with results presented
in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. You should review our financial statements and
publicly-filed reports in their entirety and not rely on any single financial measure. The material limitation associated with the use of Contribution is that it is
an incomplete measure of profitability as it does not include all operating expenses or non-operating income and expenses. Management compensates for
these limitations when using this measure by looking at other GAAP measures, such as operating income (loss) and net income (loss).
78