Overstock.com 2010 Annual Report Download - page 78

Table of Contents
Under the repurchase program discussed above, we retired $25.4 million of the Senior Notes during year ended December 31, 2010 for $24.9 million in
cash, resulting in a gain of $346,000 on early extinguishment of debt, net of $158,000 of associated unamortized discount. We retired a total $7.4 million of
our Senior Notes during the year ended December 31, 2009 for $4.6 million in cash, resulting in a gain of $2.8 million, net of $92,000 amortization of debt
discount (see Item 15 of Part IV, "Financial Statements"—Note 17—"Stock and Debt Repurchase Program"). As of December 31, 2010 and 2009, a face
amount of $34.6 million and $60.0 million of the Senior Notes remain outstanding with a carrying amount of $34.5 million and $59.5 million and $141,000
and $528,000 of debt discount, respectively.
On February 1, 2011 our Board of Directors approved a $10 million increase to our previously-announced debt repurchase program. With this increase
we may repurchase up to $15 million of our outstanding Senior Notes. On February 7, 2011, we retired an additional $10.1 million of our outstanding Senior
Notes, reducing the balance outstanding to a face amount of $24.5 million.
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).
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