Overstock.com 2011 Annual Report Download - page 78

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Table of Contents
retirement of finance obligations, partially offset by $17.0 million in proceeds from a draw down on our line of credit (which was used for the retirement of
long-term debt).
Financing activities for the year ended December 31, 2010 resulted in net cash outflows of $9.4 million primarily from $24.9 million used for retirement
of long-term debt, partially offset by $16.4 million in proceeds from finance obligations (which were primarily used for retirement of long-term debt) and
$1.5 million in proceeds from the exercise of stock options.
Redeemable common stock
In June 2009, we discovered that we had inadvertently issued 203,737 more shares of our common stock in connection with our 401(k) plan than had
been registered with the Securities and Exchange Commission for offer in connection with the 401(k) plan. These shares were contributed to or otherwise
acquired by participants in the 401(k) plan between August 16, 2006, and June 17, 2009. As a result, certain participants in the 401(k) plan may have had
rescission rights relating to the unregistered shares, although we believe that the federal statute of limitations applicable to any such rescission rights would be
one year, and that the statute of limitations had already expired at June 30, 2009 with respect to most of the inadvertent issuances.
On August 31, 2009, we entered into a Tolling and Standstill Agreement (the "Tolling Agreement") with the Overstock.com, Inc. Employee Benefits
Committee (the "Committee") relating to the 401(k) plan. We entered into the Tolling Agreement in order to preserve certain rights, if any, of plan
participants who acquired shares of Overstock common stock in the plan between July 1, 2008 and June 30, 2009 (the "Purchase Period"). In August 2010, we
made a registered rescission offer to affected participants in the plan who acquired shares of Overstock common stock during the Purchase Period. The
rescission offer applied to shares purchased during the Purchase Period at prices ranging from $6.77 per share to $21.17 per share. On October 6, 2010, our
rescission offer expired. As a result of the offer, we repurchased 1,202 shares of common stock for $26,000. On October 14, 2010 we terminated the Tolling
Agreement. At December 31, 2011 none of our shares were classified outside stockholder's equity due to the expiration of potential rescission rights
associated with those common shares. At December 31, 2010 approximately 46,000 shares or $570,000 of our common stock plus interest were classified
outside stockholders' equity, respectively.
Stock and Debt Repurchase Program
We retired $34.6 million of the Senior Notes during the year ended December 31, 2011, for $34.6 million in cash, resulting in a loss of $54,000 on early
extinguishment of debt, net of $77,000 of associated unamortized discount. Of the $34.6 million in Senior Notes retired during the year ended December 31,
2011, $10.1 million were held by Chou Associates Management Inc. or an affiliate of Chou ("Chou") and $21.7 million were held by Fairfax Financial
Holdings Limited or an affiliate of Fairfax ("Fairfax"). Chou and Fairfax are beneficial owners of more than 5% of our common stock. We retired
$25.4 million of the Senior Notes during the 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.
As of December 31, 2011 and December 31, 2010, zero and $34.5 million of the Senior Notes, net of debt discount remained outstanding, respectively.
During the years ended December 31, 2011 and 2010, we withheld from vesting restricted stock awards a total of 100,000 and 63,000 shares of our
common stock for $1.6 million and $825,000, respectively. The shares withheld represented the minimum tax withholdings upon the vesting of those
restricted stock award grants to satisfy the minimum tax withholdings owed by the grantee of the restricted stock award grant. None of these shares were
repurchased in the open market.
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