Overstock.com 2015 Annual Report Download - page 64

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Cash flow information is as follows (in thousands):





Operating activities
$ 54,516
$ 80,834
Investing activities
(82,431)
(44,430)
Financing activities
16,536
(3,428)

“Free Cash Flow” (a non-GAAP measure) for the years ended December 31, 2015 and 2014, was $(5.0) million and $39.5 million, respectively. See
 below for a reconciliation of Free Cash Flow to net cash provided by (used in) operating activities.

For the years ended December 31, 2015 and 2014, our operating activities resulted in net cash inflows of $54.5 million and $80.8 million,
respectively.
Cash received from customers generally corresponds to our net revenues as our customers primarily use credit cards to buy from us causing our
receivables from these sales transactions to settle quickly. We have payment terms with our partners that generally extend beyond the amount of time
necessary to collect proceeds from our customers. As a result, following our typically seasonally strong fourth quarter sales, at December 31 of each year, our
cash, cash equivalents and accounts payable balances normally reach their highest level (other than as a result of cash flows provided by or used in investing
and financing activities). However, our accounts payable balance normally declines during the first three months following year-end, which normally results
in a decline in our cash and cash equivalents balances from the year-end balance. The seasonality of our business causes payables and accruals to grow
significantly in the fourth quarter, and then decrease in the first quarter when they are typically paid.
The $54.5 million of net cash provided by operating activities during the year ended December 31, 2015 was primarily from non-cash depreciation
of $23.5 million, an increase in accounts payable of $10.5 million and a decrease in inventories of $6.2 million. Depreciation expense increased primarily
due to an increase in depreciation of web development projects. Accounts payable increased primarily due to increased fixed asset accruals related to the
construction of our corporate headquarters. Inventories decreased primarily due in part to our efforts to reduce levels of certain inventory. Other factors
contributing to net cash provided by operating activities were stock based compensation of $3.5 million and the increases in accounts receivable of $3.5
million and deferred revenue of $2.5 million.
The $80.8 million of net cash provided by operating activities during the year ended December 31, 2014 was primarily from an increase in accounts
payable of $21.7 million and accrued liabilities of $15.6 million, and non-cash depreciation expense of $18.1 million. Accounts payable increased due to
increased holiday sales during the fourth quarter of 2014. Accrued liabilities increased due to increased marketing activities and legal matters. Depreciation
expense increased primarily due to an increase in depreciation of web development projects. Other factors contributing to net cash provided by operating
activities were the increases in deferred revenue of $11.1 million and consolidated net income of $8.8 million.

For the year ended December 31, 2015, investing activities resulted in net cash outflows of $82.4 million, primarily from expenditures for fixed
assets of $59.5 million, acquisitions of business of $10.6 million, cost method investments of $7.0 million and disbursements for loans made of $5.0 million.
The increase in expenditures for fixed assets includes $45.4 million for the development costs for our future headquarters.
For the year ended December 31, 2014, investing activities resulted in net cash outflows of $44.4 million, primarily from expenditures for fixed
assets of $41.3 million. The increase in expenditures for fixed assets includes $16.7 million for the purchase of land and development costs for our future
headquarters.

63