Overstock.com 2010 Annual Report Download - page 117

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Table of Contents
Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
13. BORROWINGS (Continued)
weighted average effective interest rate under the Master Lease Agreement is 6.25%. We have accounted for the Master Lease Agreement as a financing
transaction and amounts owed are included in Finance Obligations, current and non-current in the consolidated balance sheets. We recorded no gain or loss as
a result of this transaction.
The Master Lease Agreement requires us to maintain a minimum Total Fixed Charge Coverage annualized ratio of at least 1.20:1.00, based on operating
results, measured at the end of each fiscal quarter. "Total Fixed Charge Coverage" is defined as our EBITDAR (which is defined to mean earnings before
interest expense, tax expense or benefit, depreciation expense, amortization expense and rent (defined as payments for real property leases and other operating
leases)) less the aggregate amount of federal, state, local and/or foreign income taxes accrued less declared dividends less 50% of depreciation expense
divided by our (rental expense plus interest expense plus required principal payments including capitalized leases on a trailing twelve-month basis).
The Master Lease Agreement, in connection with the US Bank Financing Agreement, also requires us to maintain minimum liquidity (defined as cash
plus marketable securities) of $30.0 million in the aggregate (which amount includes any minimum liquidity required under the Financing Agreement) at all
times on deposit with U.S. Bank until all amounts owed under the Master Lease Agreement are paid in full, but provides that we are permitted to withdraw the
funds on deposit with U.S. Bank at our discretion, although our failure to maintain minimum liquidity of $30.0 million would be an Event of Default under
the Master Lease Agreement. As of December 31, 2010, we had $30.0 million in compensating cash balances held at U.S. Bank.
Future principal payments of finance obligations are as follows (in thousands):
Payments due by period
2011 $ 3,922
2012 4,163
2013 4,431
2014 3,625
2015 —
$ 16,141
U.S. Bank Commercial Purchasing Card Agreement
On December 16, 2009, we entered into a commercial purchasing card agreement (the "Purchasing Card") with U.S. Bank. We use the Purchasing Card
for business purpose purchasing and must pay it in full each month. At December 31, 2010, $2.7 million was outstanding and $2.3 million was available
under the Purchasing Card. At December 31, 2009, no amount was outstanding and $5.0 million was available under the Purchasing Card.
F-28