Overstock.com 2015 Annual Report Download - page 69

At December 31, 2015 and 2014, letters of credit totaling $430,000 and $580,000, respectively, were issued on our behalf collateralized by
compensating cash balances held at U.S. Bank, which are included in Restricted cash in the accompanying consolidated balance sheets.

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, 2015, $641,000 was outstanding and $4.4 million was available under the Purchasing Card.
At December 31, 2014, $803,000 was outstanding and $4.2 million was available under the Purchasing Card.

We periodically evaluate opportunities to repurchase common stock, obtain credit facilities, or issue additional debt or equity securities. In addition,
we may, from time to time, consider the investment in, or acquisition of, complementary businesses, products, services, or technologies, any of which might
affect our liquidity requirements or cause us to issue additional debt or equity securities. There can be no assurance that financing arrangements will be
available in amounts or on terms acceptable to us, if at all.

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that would be material to
investors.

Regulation G,  and other SEC regulations regulate the disclosure of certain non-GAAP
financial information.

Contribution (a non-GAAP financial measure which we reconcile to "Gross Profit" in our statements of income and comprehensive income) consists
of gross profit less sales and marketing expense plus Club O Rewards and gift card breakage and reflects an additional way of viewing our results. We had
previously not included Club O Rewards and gift card breakage in our calculation of Contribution, but with significantly increased participation in the Club
O Rewards program, including our recently introduced Club O Silver membership tier, the related amounts have increased and we believe they should now be
included. Contribution margin is contribution as a percentage of total net revenue. We believe contribution and contribution margin provide management
and users of the financial statements information about our ability to cover our operating costs, such as technology and general and administrative expenses,
while reflecting the selling costs we incurred to generate our revenues. Club O Rewards and gift card breakage are included in Other income in our
consolidated income statement. Including these amounts in our contribution improves this measure by adding back the reductions in revenue that we
recognized for Club O Rewards that have subsequently expired and for gift cards whose redemption is remote. Other income was $3.6 million and $1.2
million for the fiscal years 2015 and 2014, respectively, and consisted of Club O Rewards and gift card breakage, which were offset by other expenses of $2.3
million and $1.3 million for 2015 and 2014, respectively. Contribution and contribution margin are used in addition to and in conjunction with results
presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. The material limitation associated with the
use of Contribution is that it is an incomplete measure of profitability as it does not include all operating expenses or non-operating income and expenses.
Management compensates for these limitations when using this measure by looking at other GAAP measures, such as operating income and net income. You
should review our financial statements and publicly-filed reports in their entirety and not rely on any single financial measure.
68