Overstock.com 2013 Annual Report Download

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Table of Contents

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
(Exact name of registrant as specified in its charter)

(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)


(Address, including zip code, of Registrant’s principal executive offices)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
 
Common Stock, $0.0001 par value Nasdaq Global Market
Securities registered pursuant to Section 12(g) of the Act: 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), (2) has been subject to such filing
requirements for the past 90 days. Yes No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes No o

Table of contents

  • Page 1
    ...telephone number, including area code) 6350 South 3000 East Salt Lase City, Utah 84121 (Address, including zip code, of Registrant's principal executive offices) Securities registered pursuant to Section 12(b) of the Act: Title of Eagh Class Name of Eagh Exghange on Whigh Registered Common Stock...

  • Page 2
    ...  The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant as of the last business day of the registrant's most recently completed second quarter (June 30, 2013), was approximately $255.8 million based upon the last sales price reported by Nasdaq...

  • Page 3
    ... Part III Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accounting Fees and Services Part...

  • Page 4
    ... can meet our published product shipping standards even during periods of relatively high sales activity; our belief that we can maintain or improve upon customer service levels that we and our customers consider acceptable; our beliefs regarding the adequacy of our order processing systems and our...

  • Page 5
    ... we may make to our business model from time to time, including aspects relating to our product mix and the mix of direct/fulfillment partner sourcing of the products we offer; the mix of products purchased by our customers; problems with cyber security or data breaches or the costs of preventing or...

  • Page 6
    ...customers by telephone, instant online chat and e-mail. We also derive revenue from other businesses, advertising products or services on our Website. Nearly all of our sales are to customers located in the United States. During the years ended December 31, 2013 and 2012 no single customer accounted...

  • Page 7
    ... Home, Furniture, Bedding & Bath, Clothing & Shoes, Electronics, Jewelry, Watches, Sports & Outdoors, Luggage & Bags, Worldstock Fair Trade, Health & Beauty, Baby, Crafts & Sewing, Office, Gifts & Flowers, Toys & Hobbies, Pets, Main Street Revolution, Emergency Preparedness, As Seen on TV, Business...

  • Page 8
    .... We staff our customer service department with dedicated in-house and outsourced professionals who respond to phone, instant online chat and e-mail inquiries on products, ordering, shipping status, returns and other areas of customer inquiry. Teghnology We use our internally developed Websites and...

  • Page 9
    ... campaigns and devote substantially more resources to their website and systems development than we do. Many have supply chain operations that decrease product shipping times to their customers, or have options for in-store product pick-up options or allow in-store returns and offer other delivery...

  • Page 10
    ... Vice Chairman of the Board of Directors and Corporate Secretary Co-President and Director Co-President Senior Vice President and General Counsel Senior Vice President, Finance and Risk Management Senior Vice President, Marketing Senior Vice President, Customer and Product Care Senior Vice President...

  • Page 11
    ... and Product Care since June 2013. Mr. Popelka previously served as Vice President of Customer Care. Since joining Overstock in 2002, Mr. Popelka has held several positions including the director of Books, Media, Movies and Games Department, and was the manager of the Business-to-Business Department...

  • Page 12
    ... products we offer for sale on our Website. Sales through our fulfillment partners accounted for 88% of our net revenues for the year ended December 31, 2013 , respectively. If we do not maintain our existing relationships or build new relationships with fulfillment partners on acceptable commercial...

  • Page 13
    ... high-quality customer service, largely depends on the efficient and uninterrupted operation of our computer and communications systems. Substantially all of our computer and communications hardware is located at a single co-location facility in Salt Lake City, Utah, with a partially redundant back...

  • Page 14
    ... could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from our customers, process electronic...

  • Page 15
    ... payments or pay their fees. If we were unable to accept payment cards, our business would be seriously damaged. Our servers and the servers of our suppliers may also be vulnerable to computer viruses, physical or electronic break-ins, and similar disruptions, including denial-of-service attacks...

  • Page 16
    ... histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than we do, could harm our business. Further, as a strategic response to changes in the competitive environment, we may from time to time make competitive pricing, service...

  • Page 17
    ... so-called "Internet affiliate advertising" statutes, which require a remote seller, with no physical presence in the state, to collect state sales tax if the remote seller contracted for advertising services with an Internet advertiser in that state. In New York and states passing similar laws, we...

  • Page 18
    ... systems used to process customers' orders and payments could harm our business. We have an evolving business model. Our business model has evolved in the past and continues to do so. In prior years we have added additional types of services and product offerings and in some cases we have modified...

  • Page 19
    ... affect consumer demand for the products and services we sell, change the mix of products we sell to a mix with a lower average gross margin and result in slower inventory turnover and greater markdowns on inventory. Higher interest rates, transportation costs, inflation, higher costs of labor...

  • Page 20
    ... for returns, credit card chargebacks, doubtful accounts and obsolete and damaged inventory), internal use software and website development (acquired and developed internally), accounting for income taxes, valuation of long-lived and intangible assets and goodwill, stock-based compensation and loss...

  • Page 21
    ... do not successfully optimize and operate our warehouse and customer service operations, it could significantly limit our ability to meet customer demand, customer shipping or return time expectations, or result in excessive costs and expenses for the size of our business. Because it is difficult to...

  • Page 22
    ... customers access our Website within a short period of time due to increased holiday demand, we may experience system interruptions that make our Website unavailable or prevent us from efficiently fulfilling orders, which may reduce the volume of goods we sell and the attractiveness of our products...

  • Page 23
    ... for such personnel is intense. Our failure to retain and attract the necessary technical, managerial, editorial, merchandising, marketing, and customer service personnel could harm our business. In order to obtain future revenue growth and sustain profitability, we will have to attract and...

  • Page 24
    ... harm our business. Our car listing service may be subject to a variety of regulatory requirements and risks. Many states and other jurisdictions, including Utah, where we are located, have regulations governing the conduct of car sellers and public advertisement for car sales. Generally, these...

  • Page 25
    ...regulations prevent users from selling items on our car listing site, they could harm our business. In addition, any negative publicity we receive regarding any allegations of unlawful or deceptive conduct may damage our reputation, our ability to attract new customers to our main shopping site, and...

  • Page 26
    ... cost of advertising and changes in our sales and marketing expenditures; our inability to retain existing customers or encourage repeat purchases; the extent to which our existing and future marketing campaigns are successful; price competition that results in lower profit margins or losses; the...

  • Page 27
    ...or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company. The price of our stock may be vulnerable to manipulation. We filed an unfair business practice lawsuit against Morgan Stanley & Co. Incorporated, Goldman Sachs & Co., Bear Stearns...

  • Page 28
    ... service operations in Salt Lake City, Utah for a term expiring in 2026. We lease approximately 15,000 square feet for customer service operations in Tooele, Utah for a term expiring in 2015. We lease approximately 51,500 square feet of warehouse space in Hebron, Kentucky beginning in March 2013...

  • Page 29
    Table of Contents ITEM 4. MINE STFETY DISCLOSURES Not applicable. 28

  • Page 30
    ... ISSUER PURCHTSES OF EQUITY SECURITIES Market information Our common stock is traded on the Nasdaq Global Market under the symbol "OSTK." The following table sets forth, for the periods indicated, the high and low sales prices per share for our common stock as reported by Nasdaq. Common Stogs Prige...

  • Page 31
    ...we recorded stock based compensation related to stock options of $0, $3,000 and $200,000, respectively. Restricted stock units activity During the years ended December 31, 2013 , 2012 and 2011, we granted 275,000, 795,000 and 268,000 restricted stock units, respectively, under the Plan. The cost of...

  • Page 32
    ...% at the end of the third year. Each restricted stock unit represents the right to one share of common stock upon vesting. During the years ended December 31, 2013 , 2012 and 2011, we recorded stock based compensation related to restricted stock units of $3.3 million , $3.5 million and $2.8 million...

  • Page 33
    ...included elsewhere in this Annual Report on Form 10-K and the discussion under Item 7-"Management's Discussion and Analysis... 2013 Consolidated Statement of Operations Data: 2012 2011 2010 2009 (in thousands, exgept per share data) Revenue, net Direct $ Fulfillment partner Total net revenue...

  • Page 34
    Table of Contents Ts of Degember 31, 2013 2012 2011 (in thousands) 2010 2009 Balange Sheet Data: Cash and cash equivalents Restricted cash Working capital Total assets Total indebtedness Redeemable common stock Stockholders' equity $ 148,665 1,580 25,709 319,767 3,155 - 122,891 33 $ 93,...

  • Page 35
    ...by telephone, instant online chat and e-mail. We also derive revenue from other businesses advertising products or services on our Website. Nearly all of our sales are to customers located in the United States. During the years ended December 31, 2013 , 2012 and 2011 no single customer accounted for...

  • Page 36
    ... Main Street Revolution, a store within our website that features products from small businesses across the United States who offer their products using our national marketing and distribution channels; • • • • a consignment service for suppliers where the suppliers' merchandise is stored...

  • Page 37
    ...partners. Fulfillment partner revenue comes from merchandise sales that occur primarily through our Website, but may also occur through offline and other channels. Club O loyalty program We have a customer loyalty program called Club O for which we sell annual memberships. We record membership fees...

  • Page 38
    ... wrong product. If the return is not a result of a product defect or a fulfillment error and the customer initiates a return of an unopened item within 30 days of delivery, for most products we refund the full cost of the merchandise minus the original shipping charge and actual return shipping fees...

  • Page 39
    ... 31, 2013 or 2012. Since inception, we determined that a valuation allowance should be recorded against all of our net deferred tax assets. This quarterly assessment required us to exercise significant judgment and make estimates about our ability to generate revenue, gross profit, operating...

  • Page 40
    ... mix shift to continue to increase at the same rate in 2014. Gross profit in 2013 increased 25% compared to 2012 primarily as a result of that revenue growth and a shift in product sales mix into higher margin home and garden products. Approximately $37.0 million of the $49.2 million increase in...

  • Page 41
    ...2014. In late 2012, Google, Inc. ("Google") discontinued providing its free Google Base product listing service to retailers and instead offered retailers a new fee based product listing service. In addition, during Q3 2013, Google tested and later implemented changes to its search engine algorithms...

  • Page 42
    ... for increased direct revenue for the year ended December 31, 2013 was a continued shift in sales mix into our home and garden products, partially offset by a decrease in sales of clothing and shoes due to our shift from a direct inventory-based model to a fulfillment partner-based model to reduce...

  • Page 43
    ... margins fluctuate based on our sales volume mix between our direct business and fulfillment partner business; changes in supplier cost and / or sales price, including competitive pricing; inventory management decisions within the direct business; sales coupons and promotions; product mix of sales...

  • Page 44
    ... Sales and marketing expenses We use a variety of methods to target our consumer audience, including online campaigns, such as advertising through keywords, product listing ads, display ads, search engines, affiliate marketing programs, social coupon websites, portals, banners, e-mail, direct mail...

  • Page 45
    Table of Contents In late 2012, Google, Inc. ("Google") discontinued providing its free Google Base product listing service to retailers and instead offered retailers a new fee based product listing service. In addition, during Q3 2013, Google tested and later implemented changes to its search ...

  • Page 46
    ..., revenue typically increases during the fourth quarter because of the holiday retail season and gross margin decreases due to increased sales of certain lower margin products, such as electronics. The actual quarterly results for each quarter could differ materially depending upon consumer...

  • Page 47
    ... is largely due to a sales mix shift into the home and garden category. This increase more than offset the impact of a 3% decrease in customer orders due to lower conversion rates. Gross profit in 2012 increased 11% compared to 2011 primarily as a result of 4% revenue growth and a 110 basis point...

  • Page 48
    ...due to a sales mix shift into more home and garden products, partially offset by a decrease of 3% in customer orders due to lower conversion rates compared to last year. The primary reason for the decrease in direct revenue for the year ended December 31, 2012 was a shift in sales mix, particularly...

  • Page 49
    ...in sales of home and garden products; partially offset by decreases in sales of electronics, jewelry and watches and books and media. Gross profit Our overall gross margins fluctuate based on our sales volume mix between our direct business and fulfillment partner business; changes in supplier cost...

  • Page 50
    ... net revenue during the year ended December 31, 2012. See "Gross profit" above for additional discussion. Operating expenses Sales and marketing expenses We advertise through a number of targeted online marketing channels, such as sponsored search, affiliate marketing, portal advertising, e-mail...

  • Page 51
    ... web services, customer support solutions and website search, and in expansion of new and existing product categories, and in investments in technology to enhance the customer experience, improve our process efficiency and support our logistics infrastructure. The following table reflects our...

  • Page 52
    ... result of extinguishments of our Senior Notes and finance obligations in 2011, partially offset by an increase in interest expense on our line of credit. Other income, net Other income, net for the years ended December 31, 2012 and 2011 totaled $3.7 million and $278,000, respectively. The increase...

  • Page 53
    ... of orders sold but not yet delivered to customers due to shipping holidays near yearend, partially offset by a decrease in accounts payable of $7.9 million , an increase in accounts receivable of $5.8 million and an increase in inventory of $3.5 million primarily for home and garden products. Cash...

  • Page 54
    ... payments due under this new operating lease are included in the summary of future minimum lease payments for all operating leases in the table above. Naming Rights During 2011, we entered into a six-year agreement with the Oakland-Alameda County Coliseum Authority ("OACCA") for the right to name...

  • Page 55
    ... Card. Capital leases In March 2013, we entered into a capital lease arrangement for $2.6 million of computer equipment that will expire in 2017. We prepaid the entire $2.6 million shortly after entering into the agreement in order to obtain discounted pricing. As such, we have no future payment...

  • Page 56
    ... on Contribution, see the calculation of this non-GAAP measure below (in thousands): Year ended Degember 31, 2013 2012 2011 Total net revenue Cost of goods sold $ Gross profit Less: Sales and marketing expense Contribution Contribution margin $ 1,304,217 1,056,557 247,660 91,609 156,051 12...

  • Page 57
    ... of our internal control over financial reporting as of December 31, 2013. In making our assessment of the effectiveness of internal control over financial reporting, management used the criteria set forth in Internal Control-Integrated uramework (1992) issued by the Committee of Sponsoring...

  • Page 58
    ... error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. The effectiveness of our internal control over financial reporting as of December 31, 2013 has been audited by KPMG LLP, an independent registered public accounting firm...

  • Page 59
    ... income (loss), changes in stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2013, and our report dated February 27, 2014 expressed an unqualified opinion on those consolidated financial statements. /s/ KPMG LLP Salt Lake City, Utah February 27...

  • Page 60
    Table of Contents (d) Changes in Internal Control Over Finangial Reporting During the fiscal quarter ended December 31, 2013, there has not occurred any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal ...

  • Page 61
    Table of Contents ITEM 9B. OTHER INFORMTTION None. 60

  • Page 62
    ... set forth in our definitive proxy statement for our 2014 annual meeting of stockholders and is incorporated herein by reference. We have adopted a Code of Business Conduct and Ethics ("Code"), which is applicable to all employees of the Company, including the principal executive officer, principal...

  • Page 63
    ... TOTTL RETURN ITEM 13. CERTTIN RELTTIONSHIPS TND RELTTED TRTNSTCTIONS, TND DIRECTOR INDEPENDENCE The information required by this Item is incorporated by reference to our definitive proxy statement for the 2014 annual meeting of stockholders. ITEM 14. PRINCIPTL TCCOUNTING FEES TND SERVICES The...

  • Page 64
    Table of Contents PTRT IV ITEM 15. EXHIBITS, FINTNCITL STTTEMENT SCHEDULES 1. Finangial Statements INDEX TO CONSOLIDTTED FINTNCITL STTTEMENTS Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Operations and Comprehensive Income (Loss)...

  • Page 65
    ..., 2013). Description of unwritten bonus pool plan adopted January 28, 2014 (incorporated by reference to our Report on Form 8-K (File No. 000-49799) filed on January 29, 2014). 10.19 (c) *21 *23 24 Subsidiaries of the Registrant. Consent of Independent Registered Public Accounting Firm Powers of...

  • Page 66
    ...Business Reporting Language): (i) Consolidated Balance Sheets at December 31, 2013 and 2012; (ii) Consolidated Statement of Operations and Comprehensive Income (Loss) for the years ended December 31 2013, 2012, and 2011; (iii) Consolidated Statements of Changes... of the same number filed with our Form...

  • Page 67
    ... of the Board (Principal Executive Officer) Executive Vice Chairman of the Board and Corporate Secretary Co-President and Director Senior Vice President, Finance and Risk Management (Principal Financial Officer and Principal Accounting Officer) Director Director Director Director February 27...

  • Page 68
    ... all material respects, the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Overstock.com, Inc.'s internal control over financial reporting as of December 31, 2013, based on criteria established...

  • Page 69
    Table of Contents Overstogs.gom, Ing. Consolidated Balange Sheets (in thousands) Degember 31, 2013 Degember 31, 2012 Tssets Current assets: Cash and cash equivalents Restricted cash Accounts receivable, net Inventories, net Prepaid inventories, net Deferred tax assets, net of valuation allowance of...

  • Page 70
    ... Ing. Consolidated Statements of Operations and Comprehensive Ingome (Loss) (in thousands, exgept per share data) Year ended Degember 31, 2013 2012 2011 Revenue, net Direct Fulfillment partner $ Total net revenue Cost of goods sold Direct(1) Fulfillment partner 156,032 1,148,185 1,304,217 136...

  • Page 71
    ... $ (261,765) 14,669 - - 100 - - (1,604) Common stock issued upon vesting of restricted stock Purchase of treasury stock Lapse of rescission rights of redeemable common stock Deemed dividend related to redeemable common stock Balance at December 31, 2011 Net income - 46 - - 2,962 - - - 68 3,030...

  • Page 72
    ... gain from sale of marketable securities (9) - - 3,051 Loss on disposition of fixed assets Stock-based compensation to employees and directors Deferred income taxes - 3,251 (72,651) 18 1,457 - (471) 72 3,527 - 73 - - 76 131 - 127 Amortization of debt discount and deferred loan costs Loss on...

  • Page 73
    ... 260 546 Fixed assets, including internal-use software and website development, costs financed through accounts payable and accrued liabilities $ 219 $ 502 $ (33) Equipment acquired under capital lease obligations Lapse of rescission rights of redeemable stock 2,563 - - - 5,077 582 See...

  • Page 74
    ... discount brand name, non-brand name and closeout merchandise, including furniture, home decor, bedding and bath, housewares, jewelry and watches, apparel and designer accessories, electronics and computers, and sporting goods, among other products. We also sell hundreds of thousands of best seller...

  • Page 75
    ...2013 (in thousands): Fair Value Measurements at Degember 31, 2013: Total Level 1 Level 2 Level 3 Assets: Cash equivalents - Money market mutual funds Trading securities held in a "rabbi trust...underlying lease agreements discounted based on a credit adjusted risk-free rate of return. See the roll...

  • Page 76
    ... recorded at invoiced amounts and do not bear interest. Allowance for doubtful accounts From time to time, we grant credit to some of our business customers on normal credit terms (typically 30 days). We perform credit evaluations of our business customers' financial condition and payment history...

  • Page 77
    ... and leasehold improvements, are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the related assets or the term of the related capital lease, whichever is shorter, as follows: Life (years) Computer software Computer hardware Furniture and equipment...

  • Page 78
    ... were no impairments to goodwill recorded during the years ended December 31, 2013 , 2012 and 2011. Revenue recognition We derive our revenue primarily from direct revenue and fulfillment partner revenue from merchandise sales. We also earn revenue from advertising on our shopping and other pages...

  • Page 79
    ...partners. Fulfillment partner revenue comes from merchandise sales that occur primarily through our Website, but may also occur through offline and other channels. Club O loyalty program We have a customer loyalty program called Club O for which we sell annual memberships. We record membership fees...

  • Page 80
    ... wrong product. If the return is not a result of a product defect or a fulfillment error and the customer initiates a return of an unopened item within 30 days of delivery, for most products we refund the full cost of the merchandise minus the original shipping charge and actual return shipping fees...

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    ... fee based on the number of clicks on keywords or links to our Website generated during a given period. Advertising expense is included in sales and marketing expenses and totaled $82.1 million , $55.6 million and $52.5 million during the years ended December 31, 2013 , 2012 and 2011, respectively...

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    ... units 154 537 927 Accounting pronouncements adopted We adopted ASU 2013-11, which clarifies current guidance by eliminating diversity in practice on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit...

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    ... income, net of tax $ $ Comprehensive income (loss) 88,509 - 88,509 $ $ 14,669 - 14,669 $ $ (19,438) - (19,438) 5. TCCOUNTS RECEIVTBLE Accounts receivable consist of the following (in thousands): Degember 31, 2013 2012 Accounts receivable, other Credit card receivables $ Less: allowance...

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    ... FIXED TSSETS Fixed assets consist of the following (in thousands): Degember 31, 2013 2012 Computer hardware and software, including internal-use software and website development Furniture and equipment Leasehold improvements Less: accumulated depreciation and amortization $ Total fixed assets...

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    ...2013 2012 Accrued marketing expenses Allowance for returns Accounts payable accrual Other accrued expenses Accrued compensation and other related costs Accrued freight Accrued taxes Facility lease accruals Inventory received but not invoiced Accrued professional expenses Credit card processing fee...

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    ...new operating lease are included in the summary of future minimum lease payments for all operating leases in the table above. Naming rights During 2011, we entered into a six-year agreement with the Oakland-Alameda County Coliseum Authority ("OACCA") for the right to name the Oakland Alameda County...

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    ... set a date for oral argument. The nature of the loss contingencies relating to any court costs ordered against us are described above. On May 30, 2008, we filed a complaint in New York state court against the New York State Department of Taxation and Finance, its Commissioner, the State of New York...

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    ... others similarly in a class action suit, alleging violations of the Electronic Communications Privacy Act, Computer Fraud and Abuse Act, Video Privacy Protection Act, and California's Consumer Legal Remedies Act and Computer Crime Law. The complaint relates to our use of a product known as Facebook...

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    ... of California consumer protection laws, alleging we made untrue or misleading statements concerning our pricing, price reductions, sources of products and shipping charges. The complaint asked for damages in the amount of not less than $15 million. We tried the case in September 2013 before...

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    ... in the United States District Court for the Central District of California for infringement of a patent covering the imaging technology that facilitates prediction of color and location within digital cameras. The initial case was dismissed, but in September 2012, Digitech filed a new complaint on...

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    ... future payment is both probable and reasonably estimable. 15. STOCKHOLDERS' EQUITY Common Stock Each share of common stock has the right to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors...

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    ... connection with these exercises, there was no tax benefit realized due to our net operating loss position. Restricted Stock Awards For the years ended December 31, 2013 , 2012 and 2011, we granted 275,000, 795,000 and 268,000 restricted stock units, respectively. The cost of restricted stock units...

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    .... Each restricted stock unit represents the right to one share of common stock upon vesting. During the years ended December 31, 2013 , 2012 and 2011, we recorded stock based compensation related to restricted stock units of $3.3 million , $3.5 million and $2.8 million , respectively. Changes to the...

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    ... of the following (in thousands): Years ended Degember 31, 2013 2012 2011 Gift card and Club-O rewards breakage Other Loss on precious metals Sublease income Gain (loss) from early retirement of convertible senior notes Loss from early retirement of finance obligations Total other income...

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    ...recovered. The components of our deferred tax assets and liabilities as of December 31, 2013 and 2012 are as follows (in thousands): Degember 31, 2013 2012 Deferred tax assets: Net operating loss carryforwards R&D tax credits AMT and other tax credits Accrued expenses Reserves and other $ Gross...

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    ... owned by our Chairman of the Board) and certain affiliated entities make travel arrangements for our executives and pay the travel related expenses incurred by our executives on company business. During the years ended December 31, 2013 , 2012 and 2011 we reimbursed Haverford-Valley L.C. $170,000...

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    ... with sales fulfilled from warehouses maintained by our fulfillment partners. Costs for this segment include product costs, outbound freight and fulfillment costs, credit card fees and customer service costs. Assets have not been allocated between the segments for our internal management purposes...

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    ... Total cost of goods sold Gross profit Operating expenses: Sales and marketing Technology General and administrative Restructuring 19,208 17,920 16,585 (39) Total operating expenses Operating income Interest income Interest expense Other income (expense), net Net income before income taxes 51...

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    ...,684 178,126 208,810 46,542 $ 46,468 295,566 342,034 Cost of goods sold Direct Fulfillment partner Total cost of goods sold Gross profit Operating expenses: Sales and marketing Technology General and administrative Restructuring Total operating expenses Operating income Interest income Interest...

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    Table of Contents Sghedule II Valuation and Qualifying Tggounts (dollars in thousands) Balange at Beginning of Year Charged to Expense Dedugtions Balange at End of Year Year ended December 31, 2013 Deferred tax valuation allowance Allowance for sales returns Allowance for doubtful accounts ...

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    ... after the restricted stock units vest. The Company also reimburses directors for out-of-pocket expenses incurred in connection with attending Board and committee meetings. Haverford Valley, L.C., an affiliate of the Company, and certain affiliated entities which make travel arrangements for...

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    ..., Inc. Market Partner SR, Inc. Market Partner BB, Inc. Market Partner BC, Inc. Market Partner EB, Inc. Market Partner NE, Inc. My Current, Inc. Supplier Oasis Fulfillment Services, Inc. Overstock Irelanm Limitem O Agency Group, Inc. Utah Utah Utah Utah Utah Utah Utah Utah Utah Utah Irelanm...

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    ...December 31, 2013, and the related financial statement schedule, and the effectiveness of internal control over financial reporting as of December 31, 2013, which reports appear in the December 31, 2013 annual report on Form 10-K of Overstock.com, Inc. /s/ KPMG LLP Salt Lake City, Utah February 27...

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    ... which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over...

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    ... which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over...

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    ... to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of Overstock.com, Inc. on Form 10-K for the year ended December 31, 2013 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as...

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    ...as applicable, and that information contained in such Report fairly presents in all material respects the financial condition and results of operations of Overstock.com, Inc. Date: February 27, 2014 /s/ ROBERC P. HUGHES Robert P. Hughes Senior Vice President, Finance and Risk Management (principal...

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