Overstock.com Inc. Reports Operating Results (10-Q)
Overstock.com Inc. has a market cap of $450.6 million; its shares were traded at around $19.73 with a P/E ratio of 47 and P/S ratio of 0.5. OSTK is in the portfolios of Prem Watsa of Fairfax Financial Holdings, Inc., Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations: Other income (expense). For the three months ended March 31, 2010, other income (expense) was $371,000. For the three months ended March 31, 2009, other income (expense) was $1.7 million, including a $1.9 million gain, net of amortization of debt discount of $63,000 on the extinguishment of $4.9 million of the Senior Notes.
Our provision for income taxes for the three months ended March 31, 2010 of $129,000 is for federal alternative minimum tax and certain income tax uncertainties, including interest and penalties. As of March 31, 2010 and December 31, 2009 we had federal net operating loss carry forwards of approximately $157.3 million and $160.4 million, respectively, and state net operating loss carry forwards of approximately $137.0 million and $140.1 million, respectively, which may be used to offset future taxable income. An additional $15.9 million of net operating losses (NOLs), related to the acquisition of Gear.com, are limited under Internal Revenue Code Section 382 to $799,000 a year plus any excess over limitations not utilized in prior years. The annual limitation available in a given year for NOLs subject to IRC Section 382 is the product of the Companys value on the date of ownership change and the federal long-term tax-exempt rate. These net operating loss carry-forwards will begin to expire in 2018.
Prior to the second quarter of 2002, we financed our activities primarily through a series of private sales of equity securities, warrants to purchase our common stock and promissory notes. During the second quarter of 2002, we completed our initial public offering pursuant to which we received approximately $26.1 million in cash, net of underwriting discounts, commissions, and other related expenses. Additionally, we completed follow-on offerings in February 2003, May 2004 and November 2004, pursuant to which we received approximately $24.0 million, $37.9 million and $75.2 million, respectively, in cash, net of underwriting discounts, commissions, and other related expenses. In November 2004, we also received $116.2 million in proceeds from the issuance of our 3.75% Convertible Senior Notes due 2011 in a transaction exempt from registration under the Securities Act. During 2006, we received $64.4 million from two stock offerings in May and December.
The primary operating use of cash and cash equivalents during the three months ended March 31, 2010 was for payments of accounts payable of $38.1 million following the holiday season, and accrued liabilities of $6.6 million primarily for bonus payments, which was offset in part by the cash provided from net income of $3.7 million and decreases in inventories of $3.7 million, accounts receivable of $3.2 million and restricted cash of $1.4 million.
The primary operating use of cash and cash equivalents during the three months ended March 31, 2009 was for payments of accounts payable of $29.2 million following the holiday season, a net loss of $3.9 million, an increase in accounts receivable of $2.4 million and a decrease in deferred revenue of $1.4 million. These uses were partially offset by the cash provided from a decrease in inventories of $8.6 million.
Cash flows from investing activities. Cash provided by (used in) investing activities includes purchases, sales, and maturities of marketable securities, cash expenditures for fixed assets, including internal-use software and website development costs, and collection of notes receivable. Investing activities resulted in net cash outflows of $4.5 million and net cash inflows of $8.4 million for the three months ended March 31, 2010 and 2009, respectively. The $4.5 million used in investing activities during the three months ended March 31, 2010 resulted primarily from expenditures for fixed assets of $4.5 million. The cash inflows of $8.4 mil
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