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Table of Contents
Overstock.com, Inc.
Notes to Consolidated Financial Statements
1. BUSINESS AND ORGANIZATION
As used herein, "Overstock.com," "we," "our" and similar terms include Overstock.com, Inc. and its subsidiaries, unless the context indicates otherwise.
We are an online retailer offering discount brand name, non-brand name and closeout merchandise, including bed-and-bath goods, home décor,
kitchenware, furniture, watches, jewelry, electronics and computers, sporting goods, apparel, and designer accessories, among other products. We also sell
hundreds of thousands of best seller and current run books, magazines, CDs, DVDs and video games ("BMMG"). We sell these products through our Internet
websites located at www.overstock.com and www.o.co ("Website"). We also operate as part of our Website an online auctions business—a marketplace for
the buying and selling of goods and services—and online sites for listing cars and real estate for sale. In October 2009, we also launched O.biz, a website
where customers can shop for bulk and business related items. In August 2010, we introduced Eziba.com, a private sale website where members can shop
exclusive deals on the latest home décor products, furniture, jewelry, apparel and accessories from many leading brands. Although our four websites are
located at different domain addresses, the technology and equipment and processes supporting the Overstock.com Website and the process of order fulfillment
described herein are the same for all four websites.
We were formed on May 5, 1997 as D2-Discounts Direct, a limited liability company. On December 30, 1998, we were reorganized as a C Corporation
in the State of Utah and reincorporated in Delaware in May 2002. On October 25, 1999, we changed our name to Overstock.com, Inc. On July 23, 2003, we
formed Overstock Mexico, S. de R. L. de C.V., a wholly owned subsidiary, to distribute products in Mexico. We ceased operations of our Mexico Operations
on October 24, 2008.
2. ACCOUNTING POLICIES
Principles of consolidation
The accompanying consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries. The consolidated financial
statements include the accounts of our Overstock Mexico, S. de R. L. de C.V. subsidiary through October 24, 2008. All intercompany account balances and
transactions have been eliminated in consolidation.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions that affect the
reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and
accompanying notes. Estimates are used for, but not limited to, investment valuation, receivables valuation, revenue recognition, sales returns, incentive
discount offers, inventory valuation, depreciable lives of fixed assets and internally-developed software, goodwill valuation, intangible valuation, income
taxes, stock-based compensation, performance-based compensation, restructuring liabilities and contingencies. Actual results could differ materially from
those estimates.
Cash equivalents
We classify all highly liquid instruments, including money market funds with a remaining maturity of three months or less at the time of purchase, as
cash equivalents. Cash equivalents as of December 31, 2010 and December 31, 2009 were $121.8 million and $129.2 million, respectively.
F-9