Overstock.com 2011 Annual Report Download - page 104

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Table of Contents
Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
2. ACCOUNTING POLICIES (Continued)
The fair value of these financial instruments was determined using the following levels of inputs as of December 31, 2010 (in thousands):
Fair Value Measurements at
December 31, 2010:
Total Level 1 Level 2 Level 3
Assets:
Cash equivalents and restricted cash—Money market mutual funds $ 124,313 $ 124,313 $ — $ —
Trading securities held in a "rabbi trust"(1) 148 148
Total assets $ 124,461 $ 124,461 $ — $ —
Liabilities:
Restructuring accrual(2) $ 1,797 $ — $ — $ 1,797
Deferred compensation accrual "rabbi trust"(3) 154 154 — —
Total liabilities $ 1,951 $ 154 $ — $ 1,797
—Trading securities held in a rabbi trust are included in Other current and long-term assets in the consolidated balance sheets (Note 18
—Employee Retirement Plan).
—The fair value was determined based on the income approach, in which we used internal cash flow projections over the life of the
underlying lease agreements discounted based on a credit adjusted risk-free rate of return. See the roll forward related to the
restructuring accrual at Note 3—Restructuring Expense.
—Non Qualified deferred compensation for rabbi trust is included in Accrued liabilities and Other long-term liabilities in the
consolidated balance sheets (Note 18—Employee Retirement Plan).
(1)
(2)
(3)
The estimated fair value of our 3.75% Convertible Senior Notes due 2011 ("Senior Notes") outstanding at December 31, 2010 was $33.2 million on a
carrying value of $34.5 million. The fair value of the Senior Notes was derived using a convertible debt pricing model with observable market inputs, which
include stock price, dividend payments, borrowing costs, equity volatility, interest rates and interest spread. On September 21, 2011 we retired all of the
outstanding Senior Notes (Note 12—Borrowings).
Restricted investments
In December 2009, we implemented a Non Qualified Deferred Compensation Plan (the "NQDC Plan") for senior management (Note 18—Employee
Retirement Plan). Deferred compensation amounts are invested in mutual funds held in a "rabbi trust" and are restricted for payment to the participants of the
NQDC Plan. We account for our investments held in the trust in accordance with Accounting Standards Codification ("ASC") No. 320 "Investments—Debt
and Equity Securities". The investments held in the trust are classified as trading securities. The fair value of the investments held in the trust totaled $302,000
and $148,000 at December 31, 2011 and December 31, 2010, respectively, and are included in Other current and long-term assets in the consolidated balance
sheets. Our gains and losses on these investments were immaterial for the years ended December 31, 2011 and 2010.
F-8