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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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87-0634302
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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6350 South 3000 East, Salt Lake City, Utah 84121
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(801) 947-3100
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(Address, including zip code, of Registrant’s principal executive offices)
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(Registrant’s telephone number, including area code)
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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June 30,
2014 |
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December 31,
2013 |
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Assets
|
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Current assets:
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Cash and cash equivalents
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$
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101,878
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$
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148,665
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Restricted cash
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1,580
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1,580
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Accounts receivable, net
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15,628
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16,047
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Inventories, net
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20,202
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27,043
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Prepaid inventories, net
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1,868
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1,804
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Deferred tax assets, net
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13,854
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13,854
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Prepaids and other current assets
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16,090
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10,298
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Total current assets
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171,100
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219,291
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Fixed assets, net
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35,002
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27,194
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Precious metals
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9,678
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9,678
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Deferred tax assets, net
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56,188
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58,797
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Goodwill
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2,784
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2,784
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Other long-term assets, net
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1,777
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2,023
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Total assets
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$
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276,529
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$
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319,767
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Liabilities and Stockholders’ Equity
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Current liabilities:
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Accounts payable
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$
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56,692
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$
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90,582
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Accrued liabilities
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50,891
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65,679
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Deferred revenue
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36,228
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37,321
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Total current liabilities
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143,811
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193,582
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Other long-term liabilities
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3,950
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3,294
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Total liabilities
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147,761
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196,876
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Commitments and contingencies (Note 5)
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0
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0
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Stockholders’ equity:
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Preferred stock, $0.0001 par value:
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Authorized shares - 5,000
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Issued and outstanding shares - none
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—
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—
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Common stock, $0.0001 par value
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Authorized shares - 100,000
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Issued shares - 27,229 and 26,909
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Outstanding shares - 24,026 and 23,785
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2
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2
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Additional paid-in capital
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363,999
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361,706
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Accumulated deficit
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(152,708
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)
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(158,587
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)
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Treasury stock:
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Shares at cost - 3,203 and 3,124
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(82,525
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)
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(80,230
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)
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Total stockholders’ equity
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128,768
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122,891
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Total liabilities and stockholders’ equity
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$
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276,529
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$
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319,767
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Three months ended June 30,
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Six months ended June 30,
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2014
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2013
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2014
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2013
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Revenue, net
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Direct
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$
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33,215
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$
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36,250
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$
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71,262
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$
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78,192
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Fulfillment partner
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299,330
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256,954
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602,490
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527,006
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Total net revenue
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332,545
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293,204
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673,752
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605,198
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Cost of goods sold
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Direct(1)
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29,473
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31,842
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62,570
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68,991
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Fulfillment partner
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240,447
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203,523
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484,561
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419,432
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Total cost of goods sold
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269,920
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235,365
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547,131
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488,423
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Gross profit
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62,625
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57,839
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126,621
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116,775
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Operating expenses:
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Sales and marketing(1)
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23,543
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19,208
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46,935
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37,913
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Technology(1)
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21,408
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17,920
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41,009
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36,080
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General and administrative(1)
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15,881
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16,585
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31,177
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31,673
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Restructuring
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—
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(39
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)
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(360
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)
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(471
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)
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Total operating expenses
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60,832
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53,674
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118,761
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105,195
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Operating income
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1,793
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4,165
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7,860
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11,580
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Interest income
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37
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32
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78
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66
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Interest expense
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(12
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)
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(37
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)
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(19
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)
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(88
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)
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Other income (expense), net
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524
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(150
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)
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983
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195
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Income before income taxes
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2,342
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4,010
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8,902
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11,753
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Provision for income taxes
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433
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312
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3,023
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358
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Net income
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$
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1,909
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$
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3,698
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$
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5,879
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$
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11,395
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Net income per common share—basic:
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Net income attributable to common shares—basic
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$
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0.08
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$
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0.16
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$
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0.25
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$
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0.48
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Weighted average common shares outstanding—basic
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24,009
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23,714
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23,968
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23,654
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Net income per common share—diluted:
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Net income attributable to common shares—diluted
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$
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0.08
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$
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0.15
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$
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0.24
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$
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0.47
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Weighted average common shares outstanding—diluted
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24,190
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24,283
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24,265
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24,158
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Comprehensive income
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$
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1,909
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$
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3,698
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$
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5,879
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$
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11,395
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(1) Includes stock-based compensation as follows (Note 7):
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Cost of goods sold — direct
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$
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45
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$
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32
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$
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85
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$
|
80
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Sales and marketing
|
97
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54
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|
178
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|
|
79
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|
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Technology
|
197
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|
78
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|
|
367
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|
|
202
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|
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General and administrative
|
689
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|
|
652
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1,321
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|
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1,207
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Total
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$
|
1,028
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|
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$
|
816
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|
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$
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1,951
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|
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$
|
1,568
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|
|
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|
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Additional
|
|
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||||||||||||||
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Common stock
|
|
Paid-in
|
|
Accumulated
|
|
Treasury stock
|
|
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Shares
|
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Amount
|
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Capital
|
|
Deficit
|
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Shares
|
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Amount
|
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Total
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||||||||||||
Balances at December 31, 2013
|
26,909
|
|
|
$
|
2
|
|
|
$
|
361,706
|
|
|
$
|
(158,587
|
)
|
|
3,124
|
|
|
$
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(80,230
|
)
|
|
$
|
122,891
|
|
Net income
|
—
|
|
|
—
|
|
|
—
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|
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5,879
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—
|
|
|
—
|
|
|
5,879
|
|
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Stock-based compensation to employees and directors
|
—
|
|
|
—
|
|
|
1,951
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|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,951
|
|
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Common stock issued upon vesting of restricted stock
|
300
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Exercise of stock options
|
20
|
|
|
—
|
|
|
342
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
342
|
|
|||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79
|
|
|
(2,295
|
)
|
|
(2,295
|
)
|
|||||
Balances at June 30, 2014
|
27,229
|
|
|
$
|
2
|
|
|
$
|
363,999
|
|
|
$
|
(152,708
|
)
|
|
3,203
|
|
|
$
|
(82,525
|
)
|
|
$
|
128,768
|
|
|
Six months ended June 30,
|
|
Twelve months ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income
|
$
|
5,879
|
|
|
$
|
11,395
|
|
|
$
|
82,993
|
|
|
$
|
22,875
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
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Depreciation and amortization
|
8,105
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|
|
7,526
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|
|
15,101
|
|
|
15,439
|
|
||||
Realized gain from sale of marketable securities
|
(10
|
)
|
|
(12
|
)
|
|
(31
|
)
|
|
(14
|
)
|
||||
Loss on disposition of fixed assets
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||
Stock-based compensation to employees and directors
|
1,951
|
|
|
1,568
|
|
|
3,634
|
|
|
3,452
|
|
||||
Deferred income taxes
|
2,609
|
|
|
—
|
|
|
(70,042
|
)
|
|
—
|
|
||||
Amortization of debt discount and deferred loan costs
|
—
|
|
|
9
|
|
|
9
|
|
|
45
|
|
||||
Loss on investment in precious metals
|
—
|
|
|
382
|
|
|
1,075
|
|
|
382
|
|
||||
Restructuring charges (reversals)
|
(360
|
)
|
|
(471
|
)
|
|
(360
|
)
|
|
(493
|
)
|
||||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restricted cash
|
—
|
|
|
125
|
|
|
75
|
|
|
264
|
|
||||
Accounts receivable, net
|
419
|
|
|
4,691
|
|
|
(1,046
|
)
|
|
(4,498
|
)
|
||||
Inventories, net
|
6,841
|
|
|
5,475
|
|
|
787
|
|
|
85
|
|
||||
Prepaid inventories, net
|
(64
|
)
|
|
260
|
|
|
(216
|
)
|
|
102
|
|
||||
Prepaids and other current assets
|
(5,485
|
)
|
|
(4,801
|
)
|
|
(1,220
|
)
|
|
(617
|
)
|
||||
Other long-term assets, net
|
(112
|
)
|
|
123
|
|
|
(233
|
)
|
|
(1,033
|
)
|
||||
Accounts payable
|
(33,932
|
)
|
|
(12,924
|
)
|
|
7,172
|
|
|
8,825
|
|
||||
Accrued liabilities
|
(14,841
|
)
|
|
(693
|
)
|
|
3,811
|
|
|
11,200
|
|
||||
Deferred revenue
|
(1,093
|
)
|
|
(8,552
|
)
|
|
6,369
|
|
|
5,596
|
|
||||
Other long-term liabilities
|
794
|
|
|
(580
|
)
|
|
2,947
|
|
|
(14
|
)
|
||||
Net cash (used in) provided by operating activities
|
(29,299
|
)
|
|
3,521
|
|
|
50,825
|
|
|
61,607
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Purchases of marketable securities
|
(16
|
)
|
|
(95
|
)
|
|
(53
|
)
|
|
(122
|
)
|
||||
Purchases of intangible assets
|
(54
|
)
|
|
—
|
|
|
(67
|
)
|
|
—
|
|
||||
Sales of marketable securities
|
77
|
|
|
152
|
|
|
217
|
|
|
152
|
|
||||
Investment in precious metals
|
—
|
|
|
—
|
|
|
(8,080
|
)
|
|
(1,397
|
)
|
||||
Expenditures for fixed assets, including internal-use software and website development
|
(15,079
|
)
|
|
(9,296
|
)
|
|
(23,850
|
)
|
|
(15,281
|
)
|
||||
Net cash used in investing activities
|
(15,072
|
)
|
|
(9,239
|
)
|
|
(31,833
|
)
|
|
(16,648
|
)
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Payments on capital lease obligations
|
(325
|
)
|
|
(2,563
|
)
|
|
(325
|
)
|
|
(2,563
|
)
|
||||
Payments on line of credit
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,000
|
)
|
||||
Paydown on direct financing arrangement
|
(138
|
)
|
|
(126
|
)
|
|
(270
|
)
|
|
(247
|
)
|
||||
Change in restricted cash
|
—
|
|
|
—
|
|
|
125
|
|
|
—
|
|
||||
Proceeds from exercise of stock options
|
342
|
|
|
986
|
|
|
916
|
|
|
986
|
|
||||
Purchase of treasury stock
|
(2,295
|
)
|
|
(1,389
|
)
|
|
(2,297
|
)
|
|
(1,396
|
)
|
||||
Net cash used in financing activities
|
(2,416
|
)
|
|
(3,092
|
)
|
|
(1,851
|
)
|
|
(20,220
|
)
|
||||
Net (decrease) increase in cash and cash equivalents
|
(46,787
|
)
|
|
(8,810
|
)
|
|
17,141
|
|
|
24,739
|
|
||||
Cash and cash equivalents, beginning of period
|
148,665
|
|
|
93,547
|
|
|
84,737
|
|
|
59,998
|
|
||||
Cash and cash equivalents, end of period
|
$
|
101,878
|
|
|
$
|
84,737
|
|
|
$
|
101,878
|
|
|
$
|
84,737
|
|
|
Six months ended June 30,
|
|
Twelve months ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash paid during the period:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest paid
|
$
|
26
|
|
|
$
|
39
|
|
|
$
|
58
|
|
|
$
|
327
|
|
Taxes paid
|
—
|
|
|
293
|
|
|
253
|
|
|
588
|
|
||||
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed assets, including internal-use software and website development, costs financed through accounts payable and accrued liabilities
|
$
|
674
|
|
|
$
|
127
|
|
|
$
|
766
|
|
|
$
|
350
|
|
Equipment acquired under capital lease obligations
|
325
|
|
|
2,563
|
|
|
325
|
|
|
2,563
|
|
•
|
Level 1
—Quoted prices for identical instruments in active markets;
|
•
|
Level 2
—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and
|
•
|
Level 3
—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
|
Fair Value Measurements at June 30, 2014:
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents - Money market mutual funds
|
$
|
68,086
|
|
|
$
|
68,086
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Trading securities held in a “rabbi trust” (1)
|
82
|
|
|
82
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
$
|
68,168
|
|
|
$
|
68,168
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred compensation accrual “rabbi trust” (2)
|
$
|
85
|
|
|
$
|
85
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total liabilities
|
$
|
85
|
|
|
$
|
85
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Fair Value Measurements at December 31, 2013:
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents - Money market mutual funds
|
$
|
58,081
|
|
|
$
|
58,081
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Trading securities held in a “rabbi trust” (1)
|
138
|
|
|
138
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
$
|
58,219
|
|
|
$
|
58,219
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred compensation accrual “rabbi trust” (2)
|
$
|
212
|
|
|
$
|
212
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total liabilities
|
$
|
212
|
|
|
$
|
212
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
— Trading securities held in a rabbi trust are included in Other current and Other long-term assets in the consolidated balance sheets.
|
(2)
|
— Non qualified deferred compensation in a rabbi trust is included in Accrued liabilities and Other long-term liabilities in the consolidated balance sheets.
|
|
Life
(years)
|
Computer software
|
2-4
|
Computer hardware
|
3-4
|
Furniture and equipment
|
3-5
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Cost of goods sold - direct
|
$
|
69
|
|
|
$
|
101
|
|
|
$
|
157
|
|
|
$
|
205
|
|
Technology
|
3,959
|
|
|
3,242
|
|
|
7,395
|
|
|
6,658
|
|
||||
General and administrative
|
282
|
|
|
320
|
|
|
553
|
|
|
663
|
|
||||
Total depreciation and amortization, including internal-use software and website development
|
$
|
4,310
|
|
|
$
|
3,663
|
|
|
$
|
8,105
|
|
|
$
|
7,526
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||||||||||
Total revenue, net
|
$
|
332,545
|
|
|
100
|
%
|
|
$
|
293,204
|
|
|
100
|
%
|
|
$
|
673,752
|
|
|
100
|
%
|
|
$
|
605,198
|
|
|
100
|
%
|
Cost of goods sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product costs and other cost of goods sold
|
254,964
|
|
|
77
|
%
|
|
222,403
|
|
|
76
|
%
|
|
516,762
|
|
|
77
|
%
|
|
461,600
|
|
|
76
|
%
|
||||
Fulfillment and related costs
|
14,956
|
|
|
4
|
%
|
|
12,962
|
|
|
4
|
%
|
|
30,369
|
|
|
5
|
%
|
|
26,823
|
|
|
4
|
%
|
||||
Total cost of goods sold
|
269,920
|
|
|
81
|
%
|
|
235,365
|
|
|
80
|
%
|
|
547,131
|
|
|
81
|
%
|
|
488,423
|
|
|
81
|
%
|
||||
Gross profit
|
$
|
62,625
|
|
|
19
|
%
|
|
$
|
57,839
|
|
|
20
|
%
|
|
$
|
126,621
|
|
|
19
|
%
|
|
$
|
116,775
|
|
|
19
|
%
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net income attributable to common shares
|
$
|
1,909
|
|
|
$
|
3,698
|
|
|
$
|
5,879
|
|
|
$
|
11,395
|
|
Net income per common share—basic:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to common shares—basic
|
0.08
|
|
|
0.16
|
|
|
0.25
|
|
|
0.48
|
|
||||
Weighted average common shares outstanding—basic
|
24,009
|
|
|
23,714
|
|
|
23,968
|
|
|
23,654
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock options and restricted stock awards
|
181
|
|
|
569
|
|
|
297
|
|
|
504
|
|
||||
Weighted average common shares outstanding—diluted
|
24,190
|
|
|
24,283
|
|
|
24,265
|
|
|
24,158
|
|
||||
Net income attributable to common shares—diluted
|
$
|
0.08
|
|
|
$
|
0.15
|
|
|
$
|
0.24
|
|
|
$
|
0.47
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Stock options and restricted stock units
|
471
|
|
|
36
|
|
|
348
|
|
|
53
|
|
|
Balance at
12/31/2013
|
|
Accretion
Expense
|
|
Net Cash
Payments
|
|
Adjustments
|
|
Balance at
6/30/2014
|
||||||||||
Lease and contract termination costs
|
$
|
445
|
|
|
$
|
7
|
|
|
$
|
(92
|
)
|
|
$
|
(360
|
)
|
|
$
|
—
|
|
Payments due by period
|
|
|
||
2014 (remainder)
|
|
$
|
5,484
|
|
2015
|
|
10,409
|
|
|
2016
|
|
8,201
|
|
|
2017
|
|
4,203
|
|
|
2018
|
|
3,826
|
|
|
Thereafter
|
|
32,437
|
|
|
|
|
$
|
64,560
|
|
Payments due by period:
|
|
|
||
2014 (remainder)
|
|
$
|
—
|
|
2015
|
|
2,901
|
|
|
2016
|
|
1,683
|
|
|
Thereafter
|
|
—
|
|
|
|
|
$
|
4,584
|
|
|
Six months ended June 30, 2014
|
|||||
|
|
|
Weighted Average
|
|||
|
Units
|
|
Grant Date
Fair Value
|
|||
Outstanding—beginning of year
|
704
|
|
|
$
|
10.79
|
|
Granted at fair value
|
233
|
|
|
28.44
|
|
|
Vested
|
(300
|
)
|
|
11.79
|
|
|
Forfeited
|
(46
|
)
|
|
16.18
|
|
|
Outstanding—end of period
|
591
|
|
|
$
|
16.79
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||||
|
|
|
Fulfillment
|
|
|
|
|
|
Fulfillment
|
|
|
||||||||||||
|
Direct
|
|
partner
|
|
Total
|
|
Direct
|
|
partner
|
|
Total
|
||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenue, net
|
$
|
33,215
|
|
|
$
|
299,330
|
|
|
$
|
332,545
|
|
|
$
|
71,262
|
|
|
$
|
602,490
|
|
|
$
|
673,752
|
|
Cost of goods sold
|
29,473
|
|
|
240,447
|
|
|
269,920
|
|
|
62,570
|
|
|
484,561
|
|
|
547,131
|
|
||||||
Gross profit
|
$
|
3,742
|
|
|
$
|
58,883
|
|
|
$
|
62,625
|
|
|
$
|
8,692
|
|
|
$
|
117,929
|
|
|
$
|
126,621
|
|
Operating expenses
|
|
|
|
|
|
|
60,832
|
|
|
|
|
|
|
|
|
118,761
|
|
||||||
Other income, net
|
|
|
|
|
|
|
549
|
|
|
|
|
|
|
|
|
1,042
|
|
||||||
Provision for income taxes
|
|
|
|
|
|
|
433
|
|
|
|
|
|
|
|
|
3,023
|
|
||||||
Net income
|
|
|
|
|
|
|
$
|
1,909
|
|
|
|
|
|
|
|
|
$
|
5,879
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenue, net
|
$
|
36,250
|
|
|
$
|
256,954
|
|
|
$
|
293,204
|
|
|
$
|
78,192
|
|
|
$
|
527,006
|
|
|
$
|
605,198
|
|
Cost of goods sold
|
31,842
|
|
|
203,523
|
|
|
235,365
|
|
|
68,991
|
|
|
419,432
|
|
|
488,423
|
|
||||||
Gross profit
|
$
|
4,408
|
|
|
$
|
53,431
|
|
|
$
|
57,839
|
|
|
$
|
9,201
|
|
|
$
|
107,574
|
|
|
$
|
116,775
|
|
Operating expenses
|
|
|
|
|
|
|
53,674
|
|
|
|
|
|
|
|
|
105,195
|
|
||||||
Other income (expense), net
|
|
|
|
|
|
|
(155
|
)
|
|
|
|
|
|
|
|
173
|
|
||||||
Provision for income taxes
|
|
|
|
|
|
|
312
|
|
|
|
|
|
|
|
|
358
|
|
||||||
Net income
|
|
|
|
|
|
|
$
|
3,698
|
|
|
|
|
|
|
|
|
$
|
11,395
|
|
•
|
the anticipated benefits and risks of our business and plans;
|
•
|
our ability to attract and retain customers in a cost-efficient manner;
|
•
|
the effectiveness of our marketing;
|
•
|
our future operating and financial results, including any projections of revenue, capital expenditures or other financial measures or amounts;
|
•
|
our decision to accept bitcoins as an acceptable payment for the goods and services we sell and our expectations regarding the advantages and risks of doing so, and our expectations that Coinbase.com and any other bitcoin transaction processing agents we utilize will perform in accordance with our expectations regardless of fluctuations in the value of bitcoin or other developments that may affect us or such processing agents;
|
•
|
our decision to acquire and hold bitcoins and our expectations regarding the advantages and risks of doing so;
|
•
|
the competition we currently face and will face in our business as the ecommerce business continues to become more competitive and additional competitors, including competitors based in China or elsewhere, continue to increase their efforts in our primary markets;
|
•
|
the effects of government regulation;
|
•
|
our future capital requirements and our ability to satisfy our capital needs;
|
•
|
our expectations regarding the adequacy of our liquidity;
|
•
|
our ability to retire or refinance any debt we may have or incur in the future;
|
•
|
our plans for international markets, our expectations for our international sales efforts and the anticipated results of our international operations;
|
•
|
our plans and expectations regarding our recently-announced launch of our Supplier Oasis Fulfillment Services and our efforts to provide multi-channel fulfillment services;
|
•
|
our plans and expectations regarding our recently-announced launch of our Farmers Market offerings;
|
•
|
our plans and expectations regarding our recently announced launch of insurance product offerings and consumer finance offerings;
|
•
|
our plans for further changes to our business;
|
•
|
our beliefs regarding current or future litigation or regulatory actions;
|
•
|
our beliefs regarding the costs and benefits of our “spend and defend” policy under which we generally refuse to settle abusive patent suits brought against us;
|
•
|
our beliefs and expectations regarding existing and future tax laws and related laws and the application of those laws to our business;
|
•
|
our beliefs regarding the adequacy of our insurance coverage;
|
•
|
our beliefs regarding the adequacy and anticipated functionality of our infrastructure, including our backup facilities and beliefs regarding the adequacy of our disaster planning and our ability to recover from a disaster or other interruption of our ability to operate our website at its highest level of functionality;
|
•
|
our beliefs regarding our cybersecurity efforts and measures and the costs we will incur in our ongoing efforts to avoid interruptions to our product offerings and other business processes from cyber attacks;
|
•
|
our belief that we 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 fulfillment and distribution capabilities;
|
•
|
our plans and expectations regarding our potential acquisition of real estate and our plans for the design and construction of a facility to serve as our corporate headquarters;
|
•
|
our beliefs and expectations regarding the adequacy of our office and warehouse facilities and any additional or modified office or warehouse facilities and any transition from our current facilities to new facilities;
|
•
|
our expectations regarding the costs and benefits of our other businesses including our new and used car listing service, our Worldstock Fair Trade offerings, our Main Street Revolution offerings, our consignment services, our ecommerce marketplace channel offerings, our community site, our public service pet adoption program, and future other businesses and the anticipated functionality and results of operations of them;
|
•
|
our expectations regarding the costs and benefits of various programs we offer, including Club O and programs pursuant to which we offer free or discounted participation in Club O or other programs we offer to members of the United States Armed Forces and/or to full-time, post-secondary students or others;
|
•
|
our belief that we and our fulfillment partners will be able to maintain inventory levels at appropriate levels despite the seasonal nature of our business;
|
•
|
our belief that our sales through other ecommerce marketplace channels will be successful and will become an important part of our business; and
|
•
|
our belief that we can successfully offer and sell a constantly changing mix of products and services.
|
•
|
changes in U.S. and global economic conditions and consumer spending;
|
•
|
world events;
|
•
|
the rate of growth of the Internet and online commerce, and the occurrence of any event that would discourage or prevent consumers from shopping online;
|
•
|
any failure to maintain our existing relationships or build new relationships with fulfillment partners on acceptable terms;
|
•
|
any difficulties we may encounter maintaining optimal levels of product quality and selection or in attracting sufficient consumer interest in our product offerings;
|
•
|
modifications 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 responding to any such problems;
|
•
|
problems with or affecting our credit card processors, including cyber-attacks, Internet or other infrastructure or communications impairment or other events that could interrupt the normal operation of the credit card processors;
|
•
|
problems with the facility where substantially all of our computer and communications hardware is located or other problems that result in the unavailability of our Website or reduced performance of our transaction systems;
|
•
|
difficulties we may have in responding to technological changes;
|
•
|
problems with the large volume of fraudulent purchase orders we receive on a daily basis;
|
•
|
problems we may encounter as a result of the listing or sale of pirated, counterfeit or illegal items by third parties;
|
•
|
difficulties we may have financing our operations or our expansion with either internally generated funds or external sources of financing;
|
•
|
any difficulties we may encounter in connection with our potential acquisition of real estate or the design, construction or financing of a facility to serve as our corporate headquarters or any transition from our current facilities to new facilities;
|
•
|
any difficulties we may encounter in connection with our Supplier Oasis Fulfillment Services and our efforts to provide multi-channel fulfillment services; our Farmers Market offerings; our insurance product offerings or our consumer finance offerings;
|
•
|
any difficulties we may encounter as a result of our reliance on third parties that we do not control for the performance of critical functions material to our business;
|
•
|
any difficulties we may encounter in connection with the rapid shift from ecommerce and online payments to mobile and multi-channel commerce and payments;
|
•
|
the extent to which we owe income or sales taxes or are required to collect sales taxes or report sales or to modify our business model in order to avoid being required to collect sales taxes or report sales;
|
•
|
any difficulties we may encounter as a consequence of accepting or holding bitcoins, whether as a result of regulatory, tax or other legal issues, technological issues, value fluctuations, lack of widespread adoption of bitcoins as an acceptable medium of exchange or otherwise;
|
•
|
competition, including competition from well-established competitors including Amazon.com, and from others including competitors with business models that may include delivery capabilities that we may be unable to match;
|
•
|
difficulties with the management of our growth and any periods in which we fail to grow in accordance with our plans;
|
•
|
fluctuations in our operating results;
|
•
|
our efforts to expand internationally;
|
•
|
our efforts to offer additional services to our customers, including insurance products and consumer financing;
|
•
|
the outcomes of legal proceedings, investigations and claims, including the outcome of our appeal of the judgment against us obtained by the District Attorneys of a number of California counties as described in this report;
|
•
|
our inability to optimize our warehouse operations;
|
•
|
risks of inventory management and seasonality;
|
•
|
the cost and availability of traditional and online advertising, and the results of our various brand building and marketing campaigns; and
|
•
|
the other risks described in this report or in our other public filings.
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
|
|
(as a percentage of total net
revenue)
|
|
(as a percentage of total net
revenue)
|
||||||||
Revenue, net
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
|
|
10.0
|
%
|
|
12.4
|
%
|
|
10.6
|
%
|
|
12.9
|
%
|
Fulfillment partner
|
|
90.0
|
|
|
87.6
|
|
|
89.4
|
|
|
87.1
|
|
Total net revenue
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Cost of goods sold
|
|
|
|
|
|
|
|
|
||||
Direct
|
|
8.9
|
|
|
10.9
|
|
|
9.3
|
|
|
11.4
|
|
Fulfillment partner
|
|
72.3
|
|
|
69.4
|
|
|
71.9
|
|
|
69.3
|
|
Total cost of goods sold
|
|
81.2
|
|
|
80.3
|
|
|
81.2
|
|
|
80.7
|
|
Gross profit
|
|
18.8
|
|
|
19.7
|
|
|
18.8
|
|
|
19.3
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
||||
Sales and marketing
|
|
7.1
|
|
|
6.6
|
|
|
7.0
|
|
|
6.3
|
|
Technology
|
|
6.4
|
|
|
6.1
|
|
|
6.1
|
|
|
6.0
|
|
General and administrative
|
|
4.8
|
|
|
5.7
|
|
|
4.6
|
|
|
5.2
|
|
Restructuring
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
Total operating expenses
|
|
18.3
|
|
|
18.3
|
|
|
17.6
|
|
|
17.4
|
|
Operating income
|
|
0.5
|
|
|
1.4
|
|
|
1.2
|
|
|
1.9
|
|
Interest income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Other income (expense), net
|
|
0.2
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
—
|
|
Net income before income taxes
|
|
0.7
|
|
|
1.4
|
|
|
1.3
|
|
|
1.9
|
|
Provision for income taxes
|
|
0.1
|
|
|
0.1
|
|
|
0.4
|
|
|
0.1
|
|
Net income
|
|
0.6
|
%
|
|
1.3
|
%
|
|
0.9
|
%
|
|
1.9
|
%
|
|
|
Three months ended June 30,
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
||||||||||||||
Revenue, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
33,215
|
|
|
$
|
36,250
|
|
|
$
|
(3,035
|
)
|
|
(8.4
|
)%
|
|
$
|
71,262
|
|
|
$
|
78,192
|
|
|
$
|
(6,930
|
)
|
|
(8.9
|
)%
|
Fulfillment partner
|
|
299,330
|
|
|
256,954
|
|
|
42,376
|
|
|
16.5
|
|
|
602,490
|
|
|
527,006
|
|
|
75,484
|
|
|
14.3
|
|
||||||
Total revenue, net
|
|
$
|
332,545
|
|
|
$
|
293,204
|
|
|
$
|
39,341
|
|
|
13.4
|
%
|
|
$
|
673,752
|
|
|
$
|
605,198
|
|
|
$
|
68,554
|
|
|
11.3
|
%
|
|
|
|
Three Months Ended June 30, 2014
|
||||||
Change in the
Estimate of Average
Transit Times (Days)
|
|
|
Increase
(Decrease)
Revenue
|
|
Increase
(Decrease) Net
Income
|
||||
2
|
|
|
$
|
(9,629
|
)
|
|
$
|
(1,329
|
)
|
1
|
|
|
$
|
(3,918
|
)
|
|
$
|
(549
|
)
|
As reported
|
|
|
As reported
|
|
|
As reported
|
|
||
-1
|
|
|
$
|
3,625
|
|
|
$
|
509
|
|
-2
|
|
|
$
|
7,059
|
|
|
$
|
984
|
|
|
|
Three months ended June 30,
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
||||||||||||||
Revenue, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
33,215
|
|
|
$
|
36,250
|
|
|
$
|
(3,035
|
)
|
|
(8.4
|
)%
|
|
$
|
71,262
|
|
|
$
|
78,192
|
|
|
$
|
(6,930
|
)
|
|
(8.9
|
)%
|
Fulfillment partner
|
|
299,330
|
|
|
256,954
|
|
|
42,376
|
|
|
16.5
|
|
|
602,490
|
|
|
527,006
|
|
|
75,484
|
|
|
14.3
|
|
||||||
Total net revenues
|
|
$
|
332,545
|
|
|
$
|
293,204
|
|
|
$
|
39,341
|
|
|
13.4
|
%
|
|
$
|
673,752
|
|
|
$
|
605,198
|
|
|
$
|
68,554
|
|
|
11.3
|
%
|
Cost of goods sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
29,473
|
|
|
$
|
31,842
|
|
|
$
|
(2,369
|
)
|
|
(7.4
|
)%
|
|
$
|
62,570
|
|
|
$
|
68,991
|
|
|
$
|
(6,421
|
)
|
|
(9.3
|
)%
|
Fulfillment partner
|
|
240,447
|
|
|
203,523
|
|
|
36,924
|
|
|
18.1
|
|
|
484,561
|
|
|
419,432
|
|
|
65,129
|
|
|
15.5
|
|
||||||
Total cost of goods sold
|
|
$
|
269,920
|
|
|
$
|
235,365
|
|
|
$
|
34,555
|
|
|
14.7
|
%
|
|
$
|
547,131
|
|
|
$
|
488,423
|
|
|
$
|
58,708
|
|
|
12.0
|
%
|
Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
3,742
|
|
|
$
|
4,408
|
|
|
$
|
(666
|
)
|
|
(15.1
|
)%
|
|
$
|
8,692
|
|
|
$
|
9,201
|
|
|
$
|
(509
|
)
|
|
(5.5
|
)%
|
Fulfillment partner
|
|
58,883
|
|
|
53,431
|
|
|
5,452
|
|
|
10.2
|
|
|
117,929
|
|
|
107,574
|
|
|
10,355
|
|
|
9.6
|
|
||||||
Total gross profit
|
|
$
|
62,625
|
|
|
$
|
57,839
|
|
|
$
|
4,786
|
|
|
8.3
|
%
|
|
$
|
126,621
|
|
|
$
|
116,775
|
|
|
$
|
9,846
|
|
|
8.4
|
%
|
|
|
Q1 2013
|
|
Q2 2013
|
|
Q3 2013
|
|
Q4 2013
|
|
FY 2013
|
|
Q1 2014
|
|
Q2 2014
|
|
|||||||
Direct
|
|
11.4
|
%
|
|
12.2
|
%
|
|
13.7
|
%
|
|
13.4
|
%
|
|
12.7
|
%
|
|
13.0
|
%
|
|
11.3
|
%
|
|
Fulfillment Partner
|
|
20.0
|
%
|
|
20.8
|
%
|
|
20.4
|
%
|
|
18.6
|
%
|
|
19.8
|
%
|
|
19.5
|
%
|
|
19.7
|
%
|
|
Combined
|
|
18.9
|
%
|
|
19.7
|
%
|
|
19.6
|
%
|
|
18.0
|
%
|
|
19.0
|
%
|
|
18.8
|
%
|
|
18.8
|
%
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||||||
Total revenue, net
|
|
$
|
332,545
|
|
|
100%
|
|
$
|
293,204
|
|
|
100%
|
|
$
|
673,752
|
|
|
100%
|
|
$
|
605,198
|
|
|
100%
|
Cost of goods sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product costs and other cost of goods sold
|
|
254,964
|
|
|
77%
|
|
222,403
|
|
|
76%
|
|
516,762
|
|
|
77%
|
|
461,600
|
|
|
76%
|
||||
Fulfillment and related costs
|
|
14,956
|
|
|
4%
|
|
12,962
|
|
|
4%
|
|
30,369
|
|
|
5%
|
|
26,823
|
|
|
4%
|
||||
Total cost of goods sold
|
|
269,920
|
|
|
81%
|
|
235,365
|
|
|
80%
|
|
547,131
|
|
|
81%
|
|
488,423
|
|
|
81%
|
||||
Gross profit
|
|
$
|
62,625
|
|
|
19%
|
|
$
|
57,839
|
|
|
20%
|
|
$
|
126,621
|
|
|
19%
|
|
$
|
116,775
|
|
|
19%
|
|
|
Three months ended June 30,
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
||||||||||||||
Sales and marketing expenses
|
|
$
|
23,543
|
|
|
$
|
19,208
|
|
|
$
|
4,335
|
|
|
22.6
|
%
|
|
$
|
46,935
|
|
|
$
|
37,913
|
|
|
$
|
9,022
|
|
|
23.8
|
%
|
Sales and marketing expenses as a percent of net revenues
|
|
7.1
|
%
|
|
6.6
|
%
|
|
|
|
|
|
|
|
7.0
|
%
|
|
6.3
|
%
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
||||||||||||||
Technology expenses
|
|
$
|
21,408
|
|
|
$
|
17,920
|
|
|
$
|
3,488
|
|
|
19.5
|
%
|
|
$
|
41,009
|
|
|
$
|
36,080
|
|
|
$
|
4,929
|
|
|
13.7
|
%
|
Technology expenses as a percent of net revenues
|
|
6.4
|
%
|
|
6.1
|
%
|
|
|
|
|
|
|
|
6.1
|
%
|
|
6.0
|
%
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
||||||||||||||
General and administrative expenses
|
|
$
|
15,881
|
|
|
$
|
16,585
|
|
|
$
|
(704
|
)
|
|
(4.2
|
)%
|
|
$
|
31,177
|
|
|
$
|
31,673
|
|
|
$
|
(496
|
)
|
|
(1.6
|
)%
|
General and administrative expenses as a percent of net revenues
|
|
4.8
|
%
|
|
5.7
|
%
|
|
|
|
|
|
|
|
4.6
|
%
|
|
5.2
|
%
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Cost of goods sold - direct
|
|
$
|
69
|
|
|
$
|
101
|
|
|
$
|
157
|
|
|
$
|
205
|
|
Technology
|
|
3,959
|
|
|
3,242
|
|
|
7,395
|
|
|
6,658
|
|
||||
General and administrative
|
|
282
|
|
|
320
|
|
|
553
|
|
|
663
|
|
||||
Total depreciation and amortization, including internal-use software and website development
|
|
$
|
4,310
|
|
|
$
|
3,663
|
|
|
$
|
8,105
|
|
|
$
|
7,526
|
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
2014
|
|
$
|
341,207
|
|
|
$
|
332,545
|
|
|
$
|
N/A
|
|
|
$
|
N/A
|
|
2013
|
|
|
311,994
|
|
|
|
293,204
|
|
|
|
301,426
|
|
|
|
397,593
|
|
2012
|
|
|
262,367
|
|
|
|
239,536
|
|
|
|
255,352
|
|
|
|
342,034
|
|
|
|
Six months ended June 30,
|
|
Twelve months ended
June 30, |
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating activities
|
|
$
|
(29,299
|
)
|
|
$
|
3,521
|
|
|
$
|
50,825
|
|
|
$
|
61,607
|
|
Investing activities
|
|
(15,072
|
)
|
|
(9,239
|
)
|
|
(31,833
|
)
|
|
(16,648
|
)
|
||||
Financing activities
|
|
(2,416
|
)
|
|
(3,092
|
)
|
|
(1,851
|
)
|
|
(20,220
|
)
|
|
|
Payments Due by Period
|
||||||||||||||||||||||||||
Contractual Obligations
|
|
Remainder
of 2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Thereafter
|
|
Total
|
||||||||||||||
Operating leases
|
|
$
|
5,484
|
|
|
$
|
10,409
|
|
|
$
|
8,201
|
|
|
$
|
4,203
|
|
|
$
|
3,826
|
|
|
$
|
32,437
|
|
|
$
|
64,560
|
|
Naming rights
|
|
1,311
|
|
|
1,351
|
|
|
1,391
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,053
|
|
|||||||
Purchase obligations
|
|
9,554
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,554
|
|
|||||||
Marketing, technology and other services
|
|
595
|
|
|
3,008
|
|
|
1,683
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,286
|
|
|||||||
Total contractual cash obligations
|
|
$
|
16,944
|
|
|
$
|
14,768
|
|
|
$
|
11,275
|
|
|
$
|
4,203
|
|
|
$
|
3,826
|
|
|
$
|
32,437
|
|
|
$
|
83,453
|
|
|
|
Amounts of Commitment Expiration Per Period
|
||||||||||||||||||||||||||
Other Commercial Commitments
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Thereafter
|
|
Total
|
||||||||||||||
Letters of credit
|
|
$
|
1,580
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,580
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||||||
Total net revenue
|
|
$
|
332,545
|
|
|
100%
|
|
$
|
293,204
|
|
|
100%
|
|
$
|
673,752
|
|
|
100%
|
|
$
|
605,198
|
|
|
100%
|
Cost of goods sold
|
|
269,920
|
|
|
81.2
|
|
235,365
|
|
|
80.3
|
|
547,131
|
|
|
81.2
|
|
488,423
|
|
|
80.7
|
||||
Gross profit
|
|
62,625
|
|
|
18.8
|
|
57,839
|
|
|
19.7
|
|
126,621
|
|
|
18.8
|
|
116,775
|
|
|
19.3
|
||||
Less: Sales and marketing expense
|
|
23,543
|
|
|
7.1
|
|
19,208
|
|
|
6.6
|
|
46,935
|
|
|
7.0
|
|
37,913
|
|
|
6.3
|
||||
Contribution and contribution margin
|
|
$
|
39,082
|
|
|
11.8%
|
|
$
|
38,631
|
|
|
13.2%
|
|
$
|
79,686
|
|
|
11.8%
|
|
$
|
78,862
|
|
|
13.0%
|
|
|
Six months ended June 30,
|
|
Twelve months ended June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net cash provided by (used in) operating activities
|
|
$
|
(29,299
|
)
|
|
$
|
3,521
|
|
|
$
|
50,825
|
|
|
$
|
61,607
|
|
Expenditures for fixed assets, including internal-use software and website development
|
|
(15,079
|
)
|
|
(9,296
|
)
|
|
(23,850
|
)
|
|
(15,281
|
)
|
||||
Free cash flow
|
|
$
|
(44,378
|
)
|
|
$
|
(5,775
|
)
|
|
$
|
26,975
|
|
|
$
|
46,326
|
|
•
|
actual or perceived lack of security of information or privacy protection;
|
•
|
cyber-attacks or other disruptions or damage to the Internet or to users’ computers;
|
•
|
significant increases in the costs of transportation of goods; and
|
•
|
taxation and governmental regulation.
|
•
|
online retailers with discount departments such as Amazon.com, Inc., eBay, Inc., Rakuten.com, Inc. (formerly Buy.com, Inc.), and AliExpress (part of the Alibaba Group);
|
•
|
private sale sites such as Rue La La and Gilt Groupe;
|
•
|
online specialty retailers such as Bluefly, Inc., Blue Nile, Inc., Wayfair, LLC, Zulily, Inc., and Zappos.com.; and
|
•
|
traditional general merchandise and specialty retailers and liquidators such as Ross Stores, Inc., T.J. Maxx, Wal-Mart Stores, Inc., Costco Wholesale Corporation, J.C. Penny Company, Inc., Sears Holding Corporation, Target Corporation, Best Buy Co., Inc., Home Depot, Inc. and Barnes and Noble, Inc., all of which also have an online presence.
|
•
|
the need to comply with additional U.S. and foreign laws and regulations to the extent applicable, including but not limited to, restrictions on advertising practices, regulations governing online services, restrictions on importation of specified or proscribed items, importation quotas, consumer protection laws, laws regarding intellectual property rights, laws dealing with consumer and data protection, privacy, encryption, and restrictions on pricing or discounts;
|
•
|
legal uncertainty regarding liability for the listings and other content provided by our users, including uncertainty as a result of less Internet-friendly legal systems, unique local laws, and lack of clear precedent or applicable law; and
|
•
|
the amount and timing of operating costs and capital expenditures relating to the expansion of our business operations and infrastructure;
|
•
|
our ability to successfully integrate operations and technologies from acquisitions or other business combinations;
|
•
|
permit the board of directors to establish the number of directors;
|
•
|
provide that only one-third of our board of directors is elected at each of our annual meetings of stockholders;
|
•
|
provide that directors may only be removed “for cause;”
|
•
|
authorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan (also known as a “poison pill”);
|
•
|
eliminate the ability of our stockholders to call special meetings of stockholders;
|
•
|
prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;
|
•
|
provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; and
|
•
|
establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
|
(a)
|
|
Exhibits
|
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation, as amended.
|
|
|
10.1
|
|
Purchase and Sale Agreement dated May 5, 2014 between O.Com Land LLC, a Utah limited liability company and wholly owned subsidiary of Overstock.com, Inc., and Gardner Bingham Junction Holdings, L.C., a Utah limited liability company, and Arbor Bingham Junction Holdings, L.C., a Utah limited liability company (incorporated by reference to exhibit 10.1 to our Report on Form 8-K filed on May 7, 2014 (File No. 000-49799).
|
|
|
10.2
|
|
Project Management Agreement dated May 5, 2014 between O.Com Land LLC, a Utah limited liability company and wholly owned subsidiary of Overstock.com, Inc., and Gardner CMS, L.C., a Utah limited liability company (incorporated by reference to exhibit 10.2 to our Report on Form 8-K filed on May 7, 2014 (File No. 000-49799).
|
|
|
31.1
|
|
Exhibit 31.1 Certification of Chief Executive Officer
|
|
|
31.2
|
|
Exhibit 31.2 Certification of Chief Financial Officer
|
|
|
32.1
|
|
Exhibit 32.1 Section 1350 Certification of Chief Executive Officer
|
|
|
32.2
|
|
Exhibit 32.2 Section 1350 Certification of Chief Financial Officer
|
|
|
101
|
|
The following financial information from our Quarterly Report on Form 10-Q for the second quarter of 2014, filed with the SEC on July 29, 2014, formatted in Extensible Business Reporting Language (“XBRL”): (i) the Consolidated Balance Sheets, (ii) Consolidated Statements of Income and Comprehensive Income (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statements of Stockholders’ Equity, and (v) Notes to Consolidated Financial Statements.(1)
|
(1)
|
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability under these sections.
|
Date:
|
July 29, 2014
|
OVERSTOCK.COM, INC.
|
|
|
|
|
|
/s/ ROBERT P. HUGHES
|
|
|
Robert P. Hughes
|
|
|
Senior Vice President, Finance and Risk Management
|
|
Overstock.com, Inc.
a Delaware Corporation
|
|
|
By:
|
/s/ John B. Pettway
|
|
|
John B. Pettway,
|
|
|
Secretary
|
Date:
|
July 29, 2014
|
/s/ PATRICK M. BYRNE
|
|
|
Patrick M. Byrne
|
|
|
Chief Executive Officer
|
|
|
(principal executive officer)
|
Date:
|
July 29, 2014
|
/s/ ROBERT P. HUGHES
|
|
|
Robert P. Hughes
|
|
|
Senior Vice President, Finance and Risk Management
|
|
|
(principal financial officer)
|
Date:
|
July 29, 2014
|
/s/ PATRICK M. BYRNE
|
|
|
Patrick M. Byrne
|
|
|
Chief Executive Officer
|
|
|
(principal executive officer)
|
Date:
|
July 29, 2014
|
/s/ ROBERT P. HUGHES
|
|
|
Robert P. Hughes
|
|
|
Senior Vice President, Finance and Risk Management
|
|
|
(principal financial officer)
|