Overstock.com 2011 Annual Report Download - page 121

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Table of Contents
Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
12. BORROWINGS (Continued)
Prior to December 27, 2011, we were a party to a Master Lease Agreement and a Financial Covenants Rider and related documents (collectively, the
"Master Lease Agreement") dated September 17, 2010 with U.S. Bancorp Equipment Finance, Inc.—Technology Finance Group ("Lessor"), an affiliate of
U.S. Bank National Association. Under the Master Lease Agreement we entered into four separate leases, pursuant to which we sold certain information
technology hardware ("IT Assets") to Lessor, which were simultaneously leased back for a period of 48 months and financed certain software licenses for a
period of 48 months for proceeds totaling $16.4 million. Subsequently, we entered into eleven additional leases; whereby we leased $8.2 million in IT Assets
and financed certain software licenses directly from the Lessor. We had the right to repurchase the IT Assets at the end of the 48-month term for $1.00.
Payments on the Master Lease Agreement were due monthly. The weighted average effective interest rate under the Master Lease Agreement was 6.29%. We
had 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 entering into these transactions.
On December 27, 2011, we and the Lessor agreed to terminate the Master Lease Agreement and all related schedules. We paid approximately
$20.1 million to Lessor in connection with the amendment and agreement to terminate the Master Lease Agreement, resulting in a $1.2 million loss on early
retirement of debt included in Other income, net in our consolidated statements of operations. As of December 31, 2011 and December 31, 2010, zero and
$16.1 million of the finance obligations remained outstanding, respectively.
U.S. Bank Purchasing Card Agreement
We have a commercial purchasing card (the "Purchasing Card") agreement with U.S. Bank. We use the Purchasing Card for business purpose purchasing
and must pay it in full each month. At December 31, 2011, $3.4 million was outstanding and $1.6 million was available under the Purchasing Card. At
December 31, 2010, $2.7 million was outstanding and $2.3 million was available under the Purchasing Card.
Capital leases
We have leased certain software and computer equipment, under non-cancelable leases that expire on various dates through 2013.
Fixed assets included assets under capital leases totaling $1.7 million at December 31, 2011 and 2010 with accumulated depreciation of $1.5 million and
$902,000, respectively. Depreciation expense of assets recorded under capital leases was $554,000 and $580,000 for the years ended December 31, 2011 and
2010, respectively.
F-25