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Overstock.com Inc. Reports Operating Results (10-Q)

October 27, 2011 | About:
10qk

10qk

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Overstock.com Inc. (OSTK) filed Quarterly Report for the period ended 2011-09-30.

Overstock.com Inc. has a market cap of $220.9 million; its shares were traded at around $9.49 with a P/E ratio of 86.3 and P/S ratio of 0.2.

Highlight of Business Operations:

In November 2004, we completed an offering of $120.0 million of 3.75% Convertible Senior Notes due 2011 (the Senior Notes). Proceeds to us were $116.2 million, net of $3.8 million of initial purchasers discount and debt issuance costs. The discount and debt issuance costs were being amortized using the straight-line method which approximates the effective interest method. We recorded amortization of discount and debt issuance costs related to this offering totaling $44,000 and $56,000 during the three months ended September 30, 2011 and 2010, respectively and $104,000 and $190,000 during the nine months ended September 30, 2011 and 2010, respectively. Interest on the Senior Notes was payable semi-annually on June 1 and December 1 of each year. The Senior Notes were scheduled to mature on December 1, 2011 and were unsecured and ranked equally in right of payment with all existing and future unsecured, unsubordinated debt and senior in right of payment to any existing and future subordinated indebtedness.

We retired all of the Senior Notes that remained outstanding on September 21, 2011 for $24.5 million in cash, resulting in a loss of $26,000 on early extinguishment of debt, net of $26,000 of associated unamortized discount. We retired $34.6 million of the Senior Notes during the nine months ended September 30, 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 nine months ended September 30, 2011, $10.1 million were held by Chou Associates Management Inc. (Chou) or an affiliate of Chou and $21.7 million were held by Fairfax Financial Holdings Limited (Fairfax) or an affiliate of Fairfax. Chou and Fairfax are beneficial owners of more than 5% of our common stock. We retired $16.1 million of the Senior Notes during the three months ended September 30, 2010 for $15.8 million in cash, resulting in a gain of $141,000 on early extinguishment of debt, net of $92,000 of associated unamortized discount. We retired $25.4 million of the Senior Notes during the nine months ended September 30, 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.

We retired all of the Senior Notes that remained outstanding on September 21, 2011 for $24.5 million in cash, resulting in a loss of $26,000 on early extinguishment of debt, net of $26,000 of associated unamortized discount. We retired $34.6 million of the Senior Notes during the nine months ended September 30, 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 nine months ended September 30, 2011, $10.1 million were held by Chou or an affiliate of Chou and $21.7 million were held by Fairfax or an affiliate of Fairfax. Chou and Fairfax are beneficial owners of more than 5% of our common stock. We retired $16.1 million of the Senior Notes during the three months ended September 30, 2010 for $15.8 million in cash, resulting in a gain of $141,000 on early extinguishment of debt, net of $92,000 of associated unamortized discount. We retired $25.4 million of the Senior Notes during the nine months ended September 30, 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.

Our provisions (benefit) for income taxes for the three months ended September 30, 2011 and 2010 totaled ($240,000) and ($44,000), respectively and ($202,000) and $78,000 for the nine months ended September 30, 2011 and 2010, respectively. The overall benefit for three and nine months ended September 30, 2011 was from a change in accounting method for tax, primarily related to internally capitalized software. As of September 30, 2011 and December 31, 2010 we had federal net operating loss carry forwards of approximately $190.5 million and $174.3 million, respectively, and state net operating loss carry forwards of approximately $174.3 million and $158.1 million, respectively, which may be used to offset future taxable income. However, we may have experienced ownership changes under Internal Revenue Code Section 382 that would limit our ability to fully use our net operating losses.

We retired all of the Senior Notes that remained outstanding on September 21, 2011 for $24.5 million in cash, resulting in a loss of $26,000 on early extinguishment of debt, net of $26,000 of associated unamortized discount. We retired $34.6 million of the Senior Notes during the nine months ended September 30, 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 nine months ended September 30, 2011, $10.1 million were held by Chou or an affiliate of Chou and $21.7 million were held by Fairfax or an affiliate of Fairfax. Chou and Fairfax are beneficial owners of more than 5% of our common stock. We retired $16.1 million of the Senior Notes during the three months ended September 30, 2010 for $15.8 million in cash, resulting in a gain of $141,000 on early extinguishment of debt, net of $92,000 of associated unamortized discount. We retired $25.4 million of the Senior Notes during the nine months ended September 30, 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.

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10qk
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