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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
|
|
87-0634302
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(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification Number)
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799 West Coliseum Way, Midvale, Utah
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|
84047
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(Address of principal executive offices)
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(Zip Code)
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(801) 947-3100
|
||
(Registrant's telephone number, including area code)
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Item 1.
|
||
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Item 2.
|
||
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Item 3.
|
||
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Item 4.
|
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Item 1.
|
||
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Item 1A.
|
||
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|
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Item 2.
|
||
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Item 3.
|
Defaults Upon Senior Securities
|
|
|
|
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Item 4.
|
||
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Item 5.
|
||
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Item 6.
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March 31,
2017 |
|
December 31,
2016 |
||||
Assets
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
136,415
|
|
|
$
|
183,098
|
|
Restricted cash
|
355
|
|
|
430
|
|
||
Accounts receivable, net
|
21,615
|
|
|
28,142
|
|
||
Inventories, net
|
17,726
|
|
|
18,937
|
|
||
Prepaid inventories, net
|
2,738
|
|
|
2,112
|
|
||
Prepaids and other current assets
|
11,789
|
|
|
11,654
|
|
||
Total current assets
|
190,638
|
|
|
244,373
|
|
||
Fixed assets, net
|
137,296
|
|
|
134,552
|
|
||
Precious metals
|
9,946
|
|
|
9,946
|
|
||
Deferred tax assets, net
|
66,351
|
|
|
56,266
|
|
||
Intangible assets, net
|
10,099
|
|
|
10,913
|
|
||
Goodwill
|
14,698
|
|
|
14,698
|
|
||
Other long-term assets, net
|
12,273
|
|
|
14,328
|
|
||
Total assets
|
$
|
441,301
|
|
|
$
|
485,076
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
86,089
|
|
|
$
|
106,337
|
|
Accrued liabilities
|
81,417
|
|
|
96,216
|
|
||
Deferred revenue
|
40,187
|
|
|
41,780
|
|
||
Finance obligations, current
|
3,267
|
|
|
3,256
|
|
||
Other current liabilities, net
|
1,604
|
|
|
1,627
|
|
||
Total current liabilities
|
212,564
|
|
|
249,216
|
|
||
Long-term debt, net
|
43,921
|
|
|
44,179
|
|
||
Finance obligations, non-current
|
11,003
|
|
|
11,831
|
|
||
Other long-term liabilities
|
6,840
|
|
|
6,890
|
|
||
Total liabilities
|
274,328
|
|
|
312,116
|
|
||
Commitments and contingencies (Note 6)
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock, $0.0001 par value, authorized shares - 5,000
|
|
|
|
|
|
||
Series A, issued and outstanding - 127
|
—
|
|
|
—
|
|
||
Series B, issued and outstanding - 569
|
—
|
|
|
—
|
|
||
Common stock, $0.0001 par value
|
|
|
|
|
|
||
Authorized shares - 100,000
|
|
|
|
|
|
||
Issued shares - 28,078 and 27,895
|
|
|
|
|
|
||
Outstanding shares - 24,963 and 25,432
|
3
|
|
|
3
|
|
||
Additional paid-in capital
|
384,942
|
|
|
383,348
|
|
||
Accumulated deficit
|
(150,427
|
)
|
|
(153,898
|
)
|
||
Accumulated other comprehensive loss
|
(1,391
|
)
|
|
(1,540
|
)
|
||
Treasury stock:
|
|
|
|
|
|
||
Shares at cost - 3,115 and 2,463
|
(63,409
|
)
|
|
(52,587
|
)
|
||
Equity attributable to stockholders of Overstock.com, Inc.
|
169,718
|
|
|
175,326
|
|
||
Equity attributable to noncontrolling interests
|
(2,745
|
)
|
|
(2,366
|
)
|
||
Total equity
|
166,973
|
|
|
172,960
|
|
||
Total liabilities and stockholders’ equity
|
$
|
441,301
|
|
|
$
|
485,076
|
|
|
Three months ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
Revenue, net
|
|
|
|
|
|
||
Direct
|
$
|
22,828
|
|
|
$
|
26,651
|
|
Partner and other
|
409,607
|
|
|
387,026
|
|
||
Total net revenue
|
432,435
|
|
|
413,677
|
|
||
Cost of goods sold
|
|
|
|
|
|
||
Direct
(1)
|
20,963
|
|
|
25,406
|
|
||
Partner and other
|
324,565
|
|
|
310,964
|
|
||
Total cost of goods sold
|
345,528
|
|
|
336,370
|
|
||
Gross profit
|
86,907
|
|
|
77,307
|
|
||
Operating expenses:
|
|
|
|
|
|
||
Sales and marketing
(1)
|
37,618
|
|
|
31,456
|
|
||
Technology
(1)
|
28,992
|
|
|
25,710
|
|
||
General and administrative
(1)
|
22,610
|
|
|
21,848
|
|
||
Litigation settlement
|
—
|
|
|
(19,520
|
)
|
||
Total operating expenses
|
89,220
|
|
|
59,494
|
|
||
Operating income (loss)
|
(2,313
|
)
|
|
17,813
|
|
||
Interest income
|
125
|
|
|
91
|
|
||
Interest expense
|
(710
|
)
|
|
(2
|
)
|
||
Other income (expense), net
|
(3,724
|
)
|
|
4,156
|
|
||
Income (loss) before income taxes
|
(6,622
|
)
|
|
22,058
|
|
||
Provision (benefit) for income taxes
|
(340
|
)
|
|
8,964
|
|
||
Consolidated net income (loss)
|
$
|
(6,282
|
)
|
|
$
|
13,094
|
|
Less: Net loss attributable to noncontrolling interests
|
(379
|
)
|
|
(335
|
)
|
||
Net income (loss) attributable to stockholders of Overstock.com, Inc.
|
$
|
(5,903
|
)
|
|
$
|
13,429
|
|
Net income (loss) per common share—basic:
|
|
|
|
|
|
||
Net income (loss) attributable to common shares—basic
|
$
|
(0.23
|
)
|
|
$
|
0.53
|
|
Weighted average common shares outstanding—basic
|
25,290
|
|
|
25,280
|
|
||
Net income (loss) per common share—diluted:
|
|
|
|
|
|
||
Net income (loss) attributable to common shares—diluted
|
$
|
(0.23
|
)
|
|
$
|
0.53
|
|
Weighted average common shares outstanding—diluted
|
25,290
|
|
|
25,290
|
|
(1) Includes stock-based compensation as follows (Note 8):
|
|
|
|
|
|
||
Cost of goods sold — direct
|
$
|
49
|
|
|
$
|
51
|
|
Sales and marketing
|
96
|
|
|
49
|
|
||
Technology
|
160
|
|
|
167
|
|
||
General and administrative
|
635
|
|
|
701
|
|
||
Total
|
$
|
940
|
|
|
$
|
968
|
|
|
Three months ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
Consolidated net income (loss)
|
$
|
(6,282
|
)
|
|
$
|
13,094
|
|
Other comprehensive income (loss):
|
|
|
|
||||
Unrealized loss on cash flow hedges, net of benefit (expense) for taxes of $(95) and $715
|
149
|
|
|
(1,020
|
)
|
||
Other comprehensive income (loss)
|
149
|
|
|
(1,020
|
)
|
||
Comprehensive income (loss)
|
$
|
(6,133
|
)
|
|
$
|
12,074
|
|
Less: Comprehensive loss attributable to noncontrolling interests
|
(379
|
)
|
|
(335
|
)
|
||
Comprehensive income (loss) attributable to stockholders of Overstock.com, Inc.
|
$
|
(5,754
|
)
|
|
$
|
12,409
|
|
|
Three months ended
March 31, 2017 |
||
Equity attributable to stockholders of Overstock.com, Inc.
|
|
|
|
Number of common shares issued
|
|
||
Balance at beginning of period
|
27,895
|
|
|
Common stock issued upon vesting of restricted stock
|
143
|
|
|
Exercise of stock options
|
40
|
|
|
Balance at end of period
|
28,078
|
|
|
|
|
||
Number of treasury stock shares
|
|
||
Balance at beginning of period
|
2,463
|
|
|
Purchases of treasury stock
|
652
|
|
|
Balance at end of period
|
3,115
|
|
|
Total number of outstanding shares
|
24,963
|
|
|
|
|
||
Common stock
|
$
|
3
|
|
|
|
||
Number of Series A preferred shares issued and outstanding
|
|
||
Balance at beginning of period
|
127
|
|
|
Series A preferred shares issued
|
—
|
|
|
Balance at end of period
|
127
|
|
|
|
|
||
Number of Series B preferred shares issued and outstanding
|
|
||
Balance at beginning of period
|
569
|
|
|
Series B preferred shares issued
|
—
|
|
|
Balance at end of period
|
569
|
|
|
|
|
||
Preferred stock
|
$
|
—
|
|
|
|
||
Additional paid-in capital
|
|
||
Balance at beginning of period
|
$
|
383,348
|
|
Stock-based compensation to employees and directors
|
940
|
|
|
Exercise of stock options
|
654
|
|
|
Balance at end of period
|
$
|
384,942
|
|
|
|
||
Accumulated deficit
|
|
||
Balance at beginning of period
|
$
|
(153,898
|
)
|
Cumulative effect of change in accounting principle
|
9,374
|
|
|
Net loss attributable to stockholders of Overstock.com, Inc.
|
(5,903
|
)
|
|
Balance at end of period
|
$
|
(150,427
|
)
|
|
|
||
Accumulated other comprehensive loss
|
|
||
Balance at beginning of period
|
$
|
(1,540
|
)
|
Net other comprehensive income
|
149
|
|
|
Balance at end of period
|
$
|
(1,391
|
)
|
|
|
||
Treasury stock
|
|
||
Balance at beginning of period
|
$
|
(52,587
|
)
|
Purchases of treasury stock
|
(10,822
|
)
|
|
Balance at end of period
|
(63,409
|
)
|
|
Total equity attributable to stockholders of Overstock.com, Inc.
|
$
|
169,718
|
|
|
|
||
Equity attributable to noncontrolling interests
|
|
||
Balance at beginning of period
|
$
|
(2,366
|
)
|
Net loss attributable to noncontrolling interests
|
(379
|
)
|
|
Total equity attributable to noncontrolling interests
|
$
|
(2,745
|
)
|
|
|
||
Total equity
|
$
|
166,973
|
|
|
Three months ended
March 31, |
|
Twelve months ended
March 31, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated net income (loss)
|
$
|
(6,282
|
)
|
|
$
|
13,094
|
|
|
$
|
(8,128
|
)
|
|
$
|
11,766
|
|
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation of fixed assets
|
7,698
|
|
|
6,189
|
|
|
28,792
|
|
|
24,359
|
|
||||
Amortization of intangible assets
|
945
|
|
|
1,098
|
|
|
3,815
|
|
|
2,649
|
|
||||
Stock-based compensation to employees and directors
|
940
|
|
|
968
|
|
|
4,863
|
|
|
3,716
|
|
||||
Deferred income taxes, net
|
(806
|
)
|
|
7,684
|
|
|
(771
|
)
|
|
7,469
|
|
||||
Loss on investment in precious metals
|
—
|
|
|
—
|
|
|
(201
|
)
|
|
1,183
|
|
||||
Loss on investment in cryptocurrency
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
||||
Impairment of cost method investment
|
4,500
|
|
|
—
|
|
|
7,350
|
|
|
—
|
|
||||
Ineffective portion of loss on cash flow hedge
|
—
|
|
|
—
|
|
|
—
|
|
|
124
|
|
||||
Termination costs of cryptobond financing
|
—
|
|
|
—
|
|
|
—
|
|
|
850
|
|
||||
Other
|
38
|
|
|
13
|
|
|
381
|
|
|
(6
|
)
|
||||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts receivable, net
|
6,527
|
|
|
(951
|
)
|
|
(2,528
|
)
|
|
(800
|
)
|
||||
Inventories, net
|
1,211
|
|
|
603
|
|
|
1,713
|
|
|
5,028
|
|
||||
Prepaid inventories, net
|
(626
|
)
|
|
109
|
|
|
(1,536
|
)
|
|
2,972
|
|
||||
Prepaids and other current assets
|
(1,173
|
)
|
|
3,107
|
|
|
(1,891
|
)
|
|
525
|
|
||||
Other long-term assets, net
|
(404
|
)
|
|
12
|
|
|
(1,202
|
)
|
|
(268
|
)
|
||||
Accounts payable
|
(20,456
|
)
|
|
(45,515
|
)
|
|
6,236
|
|
|
10,216
|
|
||||
Accrued liabilities
|
(13,689
|
)
|
|
(13,336
|
)
|
|
16,583
|
|
|
(7,130
|
)
|
||||
Deferred revenue
|
(1,593
|
)
|
|
(8,132
|
)
|
|
(2,625
|
)
|
|
(930
|
)
|
||||
Other long-term liabilities
|
73
|
|
|
554
|
|
|
119
|
|
|
1,344
|
|
||||
Net cash (used in) provided by operating activities
|
(23,097
|
)
|
|
(34,503
|
)
|
|
50,970
|
|
|
63,102
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Proceeds from sale of precious metals
|
—
|
|
|
—
|
|
|
1,610
|
|
|
—
|
|
||||
Investment in precious metals
|
—
|
|
|
—
|
|
|
(1,633
|
)
|
|
—
|
|
||||
Equity method investment
|
—
|
|
|
—
|
|
|
—
|
|
|
(57
|
)
|
||||
Disbursement of note receivable
|
(250
|
)
|
|
(2,850
|
)
|
|
(1,068
|
)
|
|
(7,850
|
)
|
||||
Cost method investments
|
(453
|
)
|
|
—
|
|
|
(5,203
|
)
|
|
(2,000
|
)
|
||||
Acquisitions of businesses, net of cash acquired
|
—
|
|
|
1,177
|
|
|
43
|
|
|
(9,424
|
)
|
||||
Expenditures for fixed assets, including internal-use software and website development
|
(11,344
|
)
|
|
(19,592
|
)
|
|
(64,033
|
)
|
|
(72,493
|
)
|
||||
Other
|
(442
|
)
|
|
29
|
|
|
(416
|
)
|
|
(136
|
)
|
||||
Net cash used in investing activities
|
(12,489
|
)
|
|
(21,236
|
)
|
|
(70,700
|
)
|
|
(91,960
|
)
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Paydown on direct financing arrangement
|
—
|
|
|
(54
|
)
|
|
—
|
|
|
(288
|
)
|
||||
Payments on finance obligations
|
(817
|
)
|
|
(375
|
)
|
|
(2,348
|
)
|
|
(479
|
)
|
||||
Payments on interest swap
|
—
|
|
|
(141
|
)
|
|
(422
|
)
|
|
(198
|
)
|
||||
Proceeds from finance obligations
|
—
|
|
|
3,421
|
|
|
7,978
|
|
|
9,119
|
|
||||
Proceeds from short-term debt
|
—
|
|
|
—
|
|
|
—
|
|
|
5,500
|
|
||||
Payments on short-term debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(750
|
)
|
||||
Proceeds from long-term debt
|
—
|
|
|
11,123
|
|
|
25,150
|
|
|
20,611
|
|
||||
Payments on long-term debt
|
(187
|
)
|
|
—
|
|
|
(187
|
)
|
|
—
|
|
||||
Change in restricted cash
|
75
|
|
|
—
|
|
|
75
|
|
|
75
|
|
||||
Proceeds from exercise of stock options
|
654
|
|
|
—
|
|
|
1,473
|
|
|
77
|
|
||||
Proceeds from rights offering, net of offering costs
|
—
|
|
|
—
|
|
|
7,591
|
|
|
—
|
|
||||
Purchase of treasury stock
|
(10,822
|
)
|
|
(308
|
)
|
|
(11,354
|
)
|
|
(321
|
)
|
||||
Payment of debt issuance costs
|
—
|
|
|
—
|
|
|
—
|
|
|
(621
|
)
|
||||
Net cash (used in) provided by financing activities
|
(11,097
|
)
|
|
13,666
|
|
|
27,956
|
|
|
32,725
|
|
||||
Net (decrease) increase in cash and cash equivalents
|
(46,683
|
)
|
|
(42,073
|
)
|
|
8,226
|
|
|
3,867
|
|
||||
Cash and cash equivalents, beginning of period
|
183,098
|
|
|
170,262
|
|
|
128,189
|
|
|
124,322
|
|
||||
Cash and cash equivalents, end of period
|
$
|
136,415
|
|
|
$
|
128,189
|
|
|
$
|
136,415
|
|
|
$
|
128,189
|
|
|
Three months ended
March 31, |
|
Twelve months ended
March 31, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash paid during the period:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest paid (net of amounts capitalized)
|
$
|
646
|
|
|
$
|
279
|
|
|
$
|
1,636
|
|
|
$
|
495
|
|
Taxes paid
|
—
|
|
|
479
|
|
|
859
|
|
|
680
|
|
||||
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed assets, including internal-use software and website development, costs financed through accounts payable and accrued liabilities
|
$
|
1,317
|
|
|
$
|
6,181
|
|
|
$
|
1,317
|
|
|
$
|
6,181
|
|
Capitalized interest cost
|
—
|
|
|
39
|
|
|
66
|
|
|
157
|
|
||||
Acquisition of businesses through stock issuance
|
—
|
|
|
—
|
|
|
—
|
|
|
18,149
|
|
||||
Change in value of cash flow hedge
|
(240
|
)
|
|
1,594
|
|
|
(2,493
|
)
|
|
1,718
|
|
||||
Note receivable converted to cost method investment
|
—
|
|
|
—
|
|
|
2,850
|
|
|
—
|
|
•
|
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.
|
p
|
Fair Value Measurements at March 31, 2017:
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents - Money market mutual funds
|
$
|
50,248
|
|
|
$
|
50,248
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Trading securities held in a “rabbi trust” (1)
|
63
|
|
|
63
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
$
|
50,311
|
|
|
$
|
50,311
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives (2)
|
$
|
1,570
|
|
|
$
|
—
|
|
|
$
|
1,570
|
|
|
$
|
—
|
|
Deferred compensation accrual “rabbi trust” (3)
|
65
|
|
|
65
|
|
|
—
|
|
|
—
|
|
||||
Total liabilities
|
$
|
1,635
|
|
|
$
|
65
|
|
|
$
|
1,570
|
|
|
$
|
—
|
|
(1)
|
— Trading securities held in a rabbi trust are included in Prepaids and other current assets and Other long-term assets, net in the consolidated balance sheets.
|
(2)
|
— Derivative financial instruments are included in Other current liabilities, net and Other long-term liabilities in the consolidated balance sheets.
|
(3)
|
— 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)
|
Building
|
40
|
Land improvements
|
20
|
Building machinery and equipment
|
15-20
|
Furniture and equipment
|
5-7
|
Computer hardware
|
3-4
|
Computer software
|
2-4
|
|
Three months ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
Cost of goods sold - direct
|
$
|
83
|
|
|
$
|
77
|
|
Technology
|
6,685
|
|
|
5,920
|
|
||
General and administrative
|
930
|
|
|
192
|
|
||
Total depreciation, including internal-use software and website development
|
$
|
7,698
|
|
|
$
|
6,189
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Acquired intangible assets
|
$
|
16,000
|
|
|
$
|
16,000
|
|
Intangible assets, other (1)
|
1,487
|
|
|
1,356
|
|
||
|
17,487
|
|
|
17,356
|
|
||
Less: accumulated amortization of intangible assets
|
(7,388
|
)
|
|
(6,443
|
)
|
||
Total intangible assets, net
|
$
|
10,099
|
|
|
$
|
10,913
|
|
(1)
|
— At March 31, 2017, the weighted average remaining useful life for intangible assets, other, excluding fully amortized intangible assets, was
3.50
years.
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Technology
|
$
|
905
|
|
|
$
|
726
|
|
Sales and marketing
|
20
|
|
|
350
|
|
||
General and administrative
|
20
|
|
|
22
|
|
||
Total amortization
|
$
|
945
|
|
|
$
|
1,098
|
|
Cash flow hedges
|
|
Amount of gain (loss) recognized in OCI on derivative (effective portion) net of tax
|
|
Location of gain (loss) reclassified from Accumulated OCI into operations (effective portion)
|
|
Amount of gain (loss) reclassified from Accumulated OCI into operations (effective portion)
|
|
Location of gain (loss) recognized in operations on derivative (ineffective portion)
|
|
Amount of gain (loss) recognized in operations on derivative (ineffective portion)
|
||||||
Three months ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swap
|
|
$
|
149
|
|
|
Interest expense
|
|
$
|
4
|
|
|
Other income (expense)
|
|
$
|
—
|
|
Three months ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swap
|
|
$
|
(1,020
|
)
|
|
Interest expense
|
|
$
|
—
|
|
|
Other income (expense)
|
|
$
|
—
|
|
Cash flow hedges
|
|
Location in balance sheet
|
|
Expiration date
|
|
Outstanding notional
|
|
Fair value
|
|
Beginning gains (losses)
|
|
Gains (losses) recorded during period (1)
|
|
Ending gains (losses)
|
||||||||||
Three months ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest rate swap
|
|
Current and Other long-term liabilities
|
|
2023
|
|
$
|
45,573
|
|
|
$
|
(1,570
|
)
|
|
$
|
(1,816
|
)
|
|
$
|
246
|
|
|
$
|
(1,570
|
)
|
Three months ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest rate swap
|
|
Current and Other long-term liabilities
|
|
2023
|
|
$
|
34,097
|
|
|
$
|
(3,991
|
)
|
|
$
|
(2,397
|
)
|
|
$
|
(1,594
|
)
|
|
$
|
(3,991
|
)
|
(1)
|
— Gains (losses) recorded during the period are presented gross of the related tax impact.
|
|
Three months ended
March 31, |
||||||||||||
|
2017
|
|
2016
|
||||||||||
Total revenue, net
|
$
|
432,435
|
|
|
100
|
%
|
|
$
|
413,677
|
|
|
100
|
%
|
Cost of goods sold
|
|
|
|
|
|
|
|
|
|
|
|
||
Product costs and other cost of goods sold
|
326,803
|
|
|
76
|
%
|
|
318,074
|
|
|
77
|
%
|
||
Fulfillment and related costs
|
18,725
|
|
|
4
|
%
|
|
18,296
|
|
|
4
|
%
|
||
Total cost of goods sold
|
345,528
|
|
|
80
|
%
|
|
336,370
|
|
|
81
|
%
|
||
Gross profit
|
$
|
86,907
|
|
|
20
|
%
|
|
$
|
77,307
|
|
|
19
|
%
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Net income (loss) attributable to stockholders of Overstock.com, Inc.
|
$
|
(5,903
|
)
|
|
$
|
13,429
|
|
Net income (loss) per common share—basic:
|
|
|
|
|
|
||
Net income (loss) attributable to common shares—basic
|
$
|
(0.23
|
)
|
|
$
|
0.53
|
|
Weighted average common shares outstanding—basic
|
25,290
|
|
|
25,280
|
|
||
Effect of dilutive securities:
|
|
|
|
|
|
||
Stock options and restricted stock awards
|
—
|
|
|
10
|
|
||
Weighted average common shares outstanding—diluted
|
25,290
|
|
|
25,290
|
|
||
Net income (loss) attributable to common shares—diluted
|
$
|
(0.23
|
)
|
|
$
|
0.53
|
|
|
Three months ended March 31,
|
||||
|
2017
|
|
2016
|
||
Stock options and restricted stock units
|
199
|
|
|
907
|
|
Purchase Price
|
Fair Value
|
||
Cash paid, net of cash acquired
|
$
|
9,353
|
|
Common stock issued
|
18,149
|
|
|
|
$
|
27,502
|
|
Allocation
|
|
||
Goodwill
|
$
|
11,914
|
|
Intangibles
|
16,000
|
|
|
Accounts receivable and other assets
|
2,565
|
|
|
Other liabilities assumed
|
(2,977
|
)
|
|
|
$
|
27,502
|
|
Intangible Assets
|
Fair Value
|
|
Weighted Average Useful Life (years)
|
||
Technology and developed software
|
$
|
13,600
|
|
|
4.38
|
Customer relationships
|
1,900
|
|
|
—
|
|
Trade names
|
300
|
|
|
7.61
|
|
Other
|
200
|
|
|
|
|
Total acquired intangible assets at the acquisition dates
|
16,000
|
|
|
|
|
Less: accumulated amortization of acquired intangible assets
|
(6,308
|
)
|
|
|
|
Total acquired intangible assets, net
|
$
|
9,692
|
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Accrued marketing expenses
|
$
|
20,627
|
|
|
$
|
26,358
|
|
Accounts payable accruals
|
16,865
|
|
|
17,229
|
|
||
Allowance for returns
|
13,537
|
|
|
18,176
|
|
||
Accrued compensation and other related costs
|
11,764
|
|
|
8,903
|
|
||
Accrued loss contingencies
|
9,155
|
|
|
9,173
|
|
||
Other accrued expenses
|
6,176
|
|
|
6,315
|
|
||
Accrued freight
|
3,293
|
|
|
10,062
|
|
||
Total accrued liabilities
|
$
|
81,417
|
|
|
$
|
96,216
|
|
•
|
a fixed charge coverage ratio on a trailing
12
-month basis of no less than
1.15
to 1.00;
|
•
|
a cash flow leverage ratio on a trailing
12
-month basis not greater than
2.75
to 1.00; and
|
•
|
minimum liquidity of at least
$50.0 million
.
|
Payments due by period
|
|
|
||
2017 (Remainder)
|
|
$
|
6,406
|
|
2018
|
|
6,686
|
|
|
2019
|
|
6,169
|
|
|
2020
|
|
4,056
|
|
|
2021
|
|
4,102
|
|
|
Thereafter
|
|
20,411
|
|
|
|
|
$
|
47,830
|
|
|
Three months ended
March 31, 2017 |
|||||
|
Units
|
|
Weighted
Average Grant Date Fair Value |
|||
Outstanding—beginning of year
|
560
|
|
|
$
|
17.44
|
|
Granted at fair value
|
254
|
|
|
16.90
|
|
|
Vested
|
(143
|
)
|
|
18.54
|
|
|
Forfeited
|
(85
|
)
|
|
16.22
|
|
|
Outstanding—end of period
|
586
|
|
|
$
|
17.11
|
|
|
Three months ended
March 31, |
||||||||||||||||||
|
Direct
|
|
Partner
|
|
Retail Total
|
|
Other
|
|
Total
|
||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Revenue, net
|
$
|
22,828
|
|
|
$
|
405,261
|
|
|
$
|
428,089
|
|
|
$
|
4,346
|
|
|
$
|
432,435
|
|
Cost of goods sold
|
20,963
|
|
|
321,297
|
|
|
342,260
|
|
|
3,268
|
|
|
345,528
|
|
|||||
Gross profit
|
$
|
1,865
|
|
|
$
|
83,964
|
|
|
$
|
85,829
|
|
|
$
|
1,078
|
|
|
$
|
86,907
|
|
Operating expenses
|
|
|
|
|
|
|
84,538
|
|
|
4,682
|
|
|
89,220
|
|
|||||
Interest and other income (expense), net (1)
|
|
|
|
|
|
|
102
|
|
|
(4,411
|
)
|
|
(4,309
|
)
|
|||||
Pre-tax income (loss)
|
|
|
|
|
1,393
|
|
|
(8,015
|
)
|
|
(6,622
|
)
|
|||||||
Provision (benefit) for income taxes
|
|
|
|
|
|
|
889
|
|
|
(1,229
|
)
|
|
(340
|
)
|
|||||
Net income (loss) (2) (3) (4)
|
|
|
|
|
|
|
$
|
504
|
|
|
$
|
(6,786
|
)
|
|
$
|
(6,282
|
)
|
||
|
|
|
|
|
|
|
|
|
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Revenue, net
|
$
|
26,651
|
|
|
$
|
384,269
|
|
|
$
|
410,920
|
|
|
$
|
2,757
|
|
|
$
|
413,677
|
|
Cost of goods sold
|
25,406
|
|
|
309,297
|
|
|
334,703
|
|
|
1,667
|
|
|
336,370
|
|
|||||
Gross profit
|
$
|
1,245
|
|
|
$
|
74,972
|
|
|
$
|
76,217
|
|
|
$
|
1,090
|
|
|
$
|
77,307
|
|
Operating expenses
|
|
|
|
|
|
|
55,380
|
|
|
4,114
|
|
|
59,494
|
|
|||||
Interest and other income (expense), net (1)
|
|
|
|
|
|
|
4,245
|
|
|
—
|
|
|
4,245
|
|
|||||
Pre-tax income (loss)
|
|
|
|
|
25,082
|
|
|
(3,024
|
)
|
|
22,058
|
|
|||||||
Provision (benefit) for income taxes
|
|
|
|
|
|
|
10,045
|
|
|
(1,081
|
)
|
|
8,964
|
|
|||||
Net income (loss) (2) (3) (4)
|
|
|
|
|
|
|
$
|
15,037
|
|
|
$
|
(1,943
|
)
|
|
$
|
13,094
|
|
•
|
the anticipated benefits and risks of our business and plans;
|
•
|
our beliefs regarding our ability to attract and retain customers in a cost-efficient manner;
|
•
|
the anticipated effectiveness of our marketing;
|
•
|
our future operating and financial results, including any projections of revenue, profits or losses, contribution, technology expense, general and administrative expense, cash flow, capital expenditures or other financial measures or amounts or non-GAAP financial measures or amounts or anticipated changes in any of them;
|
•
|
our beliefs and expectations regarding the adequacy of our facilities, including leased and third party operated warehouse facilities;
|
•
|
our belief that we can maintain compliance with the requirements of our credit facility;
|
•
|
our future capital requirements and our ability to satisfy our capital needs;
|
•
|
the adequacy of our liquidity;
|
•
|
our ability to retire or refinance the debt we have or incur in the future;
|
•
|
the competition we currently face and anticipate;
|
•
|
the effects of current and future government regulation;
|
•
|
our expectations for our international sales efforts and the anticipated results of our international operations;
|
•
|
our plans and expectations regarding Supplier Oasis and our efforts to provide multi-channel fulfillment services;
|
•
|
our plans and expectations regarding our 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 including the results of tax assessments we receive periodically;
|
•
|
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;
|
•
|
our beliefs regarding our cybersecurity efforts and measures and our efforts to prevent data breaches and the costs we will incur in our ongoing efforts to avoid interruptions to our product offerings and other business processes from cyber attacks and from data breaches;
|
•
|
our ability to 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 expectations regarding the costs and benefits of our other businesses, innovations and projects including our car listing service, our Worldstock Fair Trade offerings, our Main Street Revolution offerings and our ecommerce marketplace channel offerings;
|
•
|
our expectations regarding the costs and benefits of various programs we offer, including Club O and programs pursuant to which we may 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, and including our community site and our public service pet adoption program;
|
•
|
our expectations regarding the costs, benefits and risks of our efforts to develop blockchain and financial technology and of the costs, benefits and risks of our acquisitions of the assets and operations of a financial technology company and two registered broker dealers affiliated with the financial technology business;
|
•
|
our expectations regarding the risks and benefits of our recent rights offering of shares of our Blockchain Voting Series A Preferred Stock and our Voting Series B Preferred Stock;
|
•
|
our expectations regarding the costs and benefits of modifying our marketing efforts to deemphasize coupons;
|
•
|
our belief that we and our partners will be able to maintain inventory levels at appropriate levels despite the seasonal nature of our business;
|
•
|
our expectations regarding our emphasis on home and garden product offerings and our attempts to brand ourselves as a home and garden shopping destination;
|
•
|
our belief that our sales through other ecommerce marketplace channels will be successful; and
|
•
|
our belief that we can successfully offer and sell a constantly changing mix of products and services.
|
•
|
the potential effects on our financial results of new accounting standards we will be required to adopt no later than January 1, 2018, relating to revenue recognition;
|
•
|
changes in U.S. and global economic conditions and consumer spending;
|
•
|
any downturn in the U.S. housing industry;
|
•
|
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 or via mobile apps;
|
•
|
our failure to maintain our existing relationships with our fulfillment partners or build new relationships with fulfillment partners on acceptable terms;
|
•
|
our failure to maintain optimal levels of product quality, quantity and assortment or to attract sufficient consumer interest in our product offerings;
|
•
|
any claims we may face regarding the quality, safety or labelling of the products we offer;
|
•
|
modifications we may make to our business model from time to time, including aspects relating to our product mix and the mix of direct/partner sourcing of the products we offer;
|
•
|
the mix of products purchased by our customers and changes to that mix;
|
•
|
any claims we may face regarding cyber security issues or data breaches or difficulties we encounter regarding Internet or other infrastructure or communications impairment problems or the costs of preventing or responding to any such problems;
|
•
|
any problems with or affecting our payment card processors, including cyber-attacks, Internet or other infrastructure or communications impairment or other events that could interrupt the normal operation of the payment card processors or any difficulties we may have maintaining compliance with the rules of the payment card processors;
|
•
|
any substantial decrease in our liquidity, whether as a result of stock repurchases we may make or as a result of our business operations;
|
•
|
problems with or affecting 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;
|
•
|
losses we may incur due to fraud or our inability to prevent fraud;
|
•
|
claims or other problems we may encounter as a result of the listing or sale on our website of pirated, counterfeit or illegal items;
|
•
|
difficulties we may have financing our operations or our expansion with either internally generated funds or external sources of financing;
|
•
|
any failure by us to maintain compliance with the requirements of our credit facility;
|
•
|
any environmental liabilities we may incur relating to the real estate we recently purchased for our new corporate headquarters;
|
•
|
any failure of any of our product or service offerings outside of our main shopping website offerings to provide the benefits we expect from them;
|
•
|
any difficulties we may encounter as a result of our reliance on numerous 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 of ecommerce and online payments to mobile and multi-channel commerce and payments;
|
•
|
the extent to which we may owe income or sales taxes or may be 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 or avoid the application of other types of taxes, and any liabilities that may ultimately be imposed upon us for not having collected sales tax in jurisdictions in which we believe we had no obligation to do so;
|
•
|
any losses or issues we may encounter as a consequence of accepting or holding bitcoin or other cryptocurrencies, whether as a result of regulatory, tax or other legal issues, technological issues, value fluctuations, lack of widespread adoption of bitcoin or other cryptocurrencies as an acceptable medium of exchange or otherwise;
|
•
|
increasing competition, including competition from well-established competitors including Amazon.com, competition from competitors based in China or elsewhere, competition from well-funded companies willing to incur substantial losses in order to build market share, 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;
|
•
|
difficulties we may encounter in connection with our efforts to emphasize our home and garden product offerings and to brand ourselves as a home and garden shopping destination, including the risk that our sales of home and garden product offerings could decrease substantially as a result of a significant downturn in some or all of the U.S. housing market;
|
•
|
fluctuations in our operating results;
|
•
|
difficulties we may encounter in connection with our efforts to expand internationally, including claims we may face and liabilities we may incur in connection with those efforts;
|
•
|
difficulties we may encounter in connection with our efforts to offer services to our customers outside of our retail ecommerce business;
|
•
|
difficulties, including expense and any operational or regulatory issues we may encounter in connection with the integration or operation of the assets and operations of the financial technology company and two registered broker dealers affiliated with the financial technology business that we acquired;
|
•
|
technical, operational, regulatory or other difficulties we may encounter with our Medici blockchain and financial technology initiatives, including any difficulties we may have marketing any products or services Medici may offer, whether due to lack of market acceptance or as a result of competition from any of the numerous competitors seeking to develop competing technologies or systems or as a result of patents that may be granted to other companies or persons;
|
•
|
any impairment we may recognize with respect to assets or businesses that we have acquired or may acquire, including with respect to our investments in companies that are in startup or development stages;
|
•
|
any liability or expense we may incur as a result of our investments in other companies, whether as a result of regulatory issues or otherwise;
|
•
|
adverse results in legal proceedings, investigations or other claims;
|
•
|
any difficulties we may have optimizing our warehouse operations;
|
•
|
the risks of inventory management and seasonality, particularly with inventory subject to rapid price declines;
|
•
|
the cost and availability of traditional and online advertising, the rapid changes in the online advertising business and the longer-term changes in the traditional advertising business, and the results of our various brand building and marketing campaigns;
|
•
|
risks that the amount of deferred tax assets we consider realizable could be reduced if estimates of future taxable income during the carryforward period are reduced; and
|
•
|
the other risks described in this report or in our other public filings.
|
|
Three months ended
March 31, |
||||
|
2017
|
|
2016
|
||
|
(as a percentage of total net
revenue)
|
||||
Revenue, net
|
|
|
|
|
|
Direct
|
5.3
|
%
|
|
6.4
|
%
|
Partner and other
|
94.7
|
|
|
93.6
|
|
Total net revenue
|
100.0
|
|
|
100.0
|
|
Cost of goods sold
|
|
|
|
||
Direct
|
4.8
|
|
|
6.1
|
|
Partner and other
|
75.1
|
|
|
75.2
|
|
Total cost of goods sold
|
79.9
|
|
|
81.3
|
|
Gross profit
|
20.1
|
|
|
18.7
|
|
Operating expenses:
|
|
|
|
||
Sales and marketing
|
8.7
|
|
|
7.6
|
|
Technology
|
6.7
|
|
|
6.2
|
|
General and administrative
|
5.2
|
|
|
5.3
|
|
Litigation settlement
|
—
|
|
|
(4.7
|
)
|
Total operating expenses
|
20.6
|
|
|
14.4
|
|
Operating income (loss)
|
(0.5
|
)
|
|
4.3
|
|
Other income (expense), net
|
(0.9
|
)
|
|
1.0
|
|
Income (loss) before income taxes
|
(1.5
|
)
|
|
5.3
|
|
Provision (benefit) for income taxes
|
(0.1
|
)
|
|
2.2
|
|
Consolidated net income (loss)
|
(1.5
|
)%
|
|
3.2
|
%
|
|
Three months ended
March 31, |
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Revenue, net
|
|
|
|
|
|
|
|
|
|
|
|
|||
Direct
|
$
|
22,828
|
|
|
$
|
26,651
|
|
|
$
|
(3,823
|
)
|
|
(14.3
|
)%
|
Partner and other
|
409,607
|
|
|
387,026
|
|
|
22,581
|
|
|
5.8
|
|
|||
Total revenue, net
|
$
|
432,435
|
|
|
$
|
413,677
|
|
|
$
|
18,758
|
|
|
4.5
|
%
|
|
Three Months Ended
March 31, 2017 |
||||||
Change in the
Estimate of Average
Transit Times (Days)
|
Increase
(Decrease)
Revenue
|
|
Increase
(Decrease) Pre-Tax
Income
|
||||
2
|
$
|
(21,174
|
)
|
|
$
|
(2,616
|
)
|
1
|
$
|
(8,802
|
)
|
|
$
|
(1,089
|
)
|
As reported
|
As reported
|
|
|
As reported
|
|
||
-1
|
$
|
5,818
|
|
|
$
|
720
|
|
-2
|
$
|
10,847
|
|
|
$
|
1,341
|
|
|
Three months ended
March 31, |
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Revenue, net
|
|
|
|
|
|
|
|
|
|
|
|
|||
Direct
|
$
|
22,828
|
|
|
$
|
26,651
|
|
|
$
|
(3,823
|
)
|
|
(14.3
|
)%
|
Partner and other
|
409,607
|
|
|
387,026
|
|
|
22,581
|
|
|
5.8
|
|
|||
Total net revenue
|
$
|
432,435
|
|
|
$
|
413,677
|
|
|
$
|
18,758
|
|
|
4.5
|
%
|
Cost of goods sold
|
|
|
|
|
|
|
|
|
|
|
|
|||
Direct
|
$
|
20,963
|
|
|
$
|
25,406
|
|
|
$
|
(4,443
|
)
|
|
(17.5
|
)%
|
Partner and other
|
324,565
|
|
|
310,964
|
|
|
13,601
|
|
|
4.4
|
|
|||
Total cost of goods sold
|
$
|
345,528
|
|
|
$
|
336,370
|
|
|
$
|
9,158
|
|
|
2.7
|
%
|
Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|||
Direct
|
$
|
1,865
|
|
|
$
|
1,245
|
|
|
$
|
620
|
|
|
49.8
|
%
|
Partner and other
|
85,042
|
|
|
76,062
|
|
|
8,980
|
|
|
11.8
|
|
|||
Total gross profit
|
$
|
86,907
|
|
|
$
|
77,307
|
|
|
$
|
9,600
|
|
|
12.4
|
%
|
|
|
Q1 2016
|
|
Q2 2016
|
|
Q3 2016
|
|
Q4 2016
|
|
FY 2016
|
|
Q1 2017
|
||||||
Direct
|
|
4.7
|
%
|
|
6.2
|
%
|
|
2.8
|
%
|
|
7.3
|
%
|
|
5.2
|
%
|
|
8.2
|
%
|
Partner and other
|
|
19.7
|
%
|
|
19.0
|
%
|
|
19.1
|
%
|
|
19.2
|
%
|
|
19.2
|
%
|
|
20.8
|
%
|
Combined
|
|
18.7
|
%
|
|
18.2
|
%
|
|
18.2
|
%
|
|
18.6
|
%
|
|
18.4
|
%
|
|
20.1
|
%
|
|
Three months ended
March 31, |
||||||||||
|
2017
|
|
2016
|
||||||||
Total revenue, net
|
$
|
432,435
|
|
|
100%
|
|
$
|
413,677
|
|
|
100%
|
Cost of goods sold
|
|
|
|
|
|
|
|
|
|
||
Product costs and other cost of goods sold
|
326,803
|
|
|
76%
|
|
318,074
|
|
|
77%
|
||
Fulfillment and related costs
|
18,725
|
|
|
4%
|
|
18,296
|
|
|
4%
|
||
Total cost of goods sold
|
345,528
|
|
|
80%
|
|
336,370
|
|
|
81%
|
||
Gross profit
|
$
|
86,907
|
|
|
20%
|
|
$
|
77,307
|
|
|
19%
|
|
Three months ended
March 31, |
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Sales and marketing expenses
|
$
|
37,618
|
|
|
$
|
31,456
|
|
|
$
|
6,162
|
|
|
19.6
|
%
|
Sales and marketing expenses as a percent of net revenues
|
8.7
|
%
|
|
7.6
|
%
|
|
|
|
|
|
Three months ended
March 31, |
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Technology expenses
|
$
|
28,992
|
|
|
$
|
25,710
|
|
|
$
|
3,282
|
|
|
12.8
|
%
|
Technology expenses as a percent of net revenues
|
6.7
|
%
|
|
6.2
|
%
|
|
|
|
|
|
|
|
Three months ended
March 31, |
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
General and administrative expenses
|
$
|
22,610
|
|
|
$
|
21,848
|
|
|
$
|
762
|
|
|
3.5
|
%
|
General and administrative expenses as a percent of net revenues
|
5.2
|
%
|
|
5.3
|
%
|
|
|
|
|
|
|
|
Three months ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
Cost of goods sold - direct
|
$
|
83
|
|
|
$
|
77
|
|
Technology
|
6,685
|
|
|
5,920
|
|
||
General and administrative
|
930
|
|
|
192
|
|
||
Total depreciation, including internal-use software and website development
|
$
|
7,698
|
|
|
$
|
6,189
|
|
|
Three months ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
Technology
|
$
|
905
|
|
|
$
|
726
|
|
Marketing
|
20
|
|
|
350
|
|
||
General and administrative
|
20
|
|
|
22
|
|
||
Total amortization of intangible assets other than goodwill
|
$
|
945
|
|
|
$
|
1,098
|
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
2017
|
|
$
|
432,435
|
|
|
$
|
N/A
|
|
|
$
|
N/A
|
|
|
$
|
N/A
|
|
2016
|
|
|
413,677
|
|
|
|
418,540
|
|
|
|
441,564
|
|
|
|
526,182
|
|
2015
|
|
|
398,344
|
|
|
|
388,013
|
|
|
|
391,211
|
|
|
|
480,270
|
|
|
|
Three months ended
March 31, |
|
Twelve months ended
March 31, |
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating activities
|
|
$
|
(23,097
|
)
|
|
$
|
(34,503
|
)
|
|
$
|
50,970
|
|
|
$
|
63,102
|
|
Investing activities
|
|
(12,489
|
)
|
|
(21,236
|
)
|
|
(70,700
|
)
|
|
(91,960
|
)
|
||||
Financing activities
|
|
(11,097
|
)
|
|
13,666
|
|
|
27,956
|
|
|
32,725
|
|
|
|
Payments Due by Period
|
||||||||||||||||||||||||||
Contractual Obligations
|
|
Remainder of 2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
||||||||||||||
U.S. Bank term loan payments (1)
|
|
843
|
|
|
1,124
|
|
|
1,124
|
|
|
1,124
|
|
|
1,124
|
|
|
40,234
|
|
|
45,573
|
|
|||||||
U.S. Bank master lease agreement (2)
|
|
2,439
|
|
|
3,356
|
|
|
3,479
|
|
|
3,502
|
|
|
1,494
|
|
|
—
|
|
|
14,270
|
|
|||||||
Operating leases (3)
|
|
6,406
|
|
|
6,686
|
|
|
6,169
|
|
|
4,056
|
|
|
4,102
|
|
|
20,411
|
|
|
47,830
|
|
|||||||
Purchase obligations (4)
|
|
2,321
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,321
|
|
|||||||
Total contractual cash obligations
|
|
$
|
12,009
|
|
|
$
|
11,166
|
|
|
$
|
10,772
|
|
|
$
|
8,682
|
|
|
$
|
6,720
|
|
|
$
|
60,645
|
|
|
$
|
109,994
|
|
•
|
a fixed charge coverage ratio on a trailing
12
-month basis of no less than
1.15
to 1.00;
|
•
|
a cash flow leverage ratio on a trailing
12
-month basis not greater than
2.75
to 1.00; and
|
•
|
minimum liquidity of at least
$50.0 million
.
|
|
Three months ended
March 31, |
||||||||||||
|
2017
|
|
2016
|
||||||||||
Total net revenue
|
$
|
432,435
|
|
|
100
|
%
|
|
$
|
413,677
|
|
|
100
|
%
|
Cost of goods sold
|
345,528
|
|
|
79.9
|
%
|
|
336,370
|
|
|
81.3
|
%
|
||
Gross profit
|
86,907
|
|
|
20.1
|
%
|
|
77,307
|
|
|
18.7
|
%
|
||
Less: Sales and marketing expense
|
37,618
|
|
|
8.7
|
%
|
|
31,456
|
|
|
7.6
|
%
|
||
Plus: Club O Rewards and gift card breakage (included in Other income (expense), net)
|
671
|
|
|
0.2
|
%
|
|
4,169
|
|
|
1.0
|
%
|
||
Contribution and contribution margin
|
$
|
49,960
|
|
|
11.6
|
%
|
|
$
|
50,020
|
|
|
12.1
|
%
|
|
Three months ended
March 31, |
||||||||||||||||
|
Direct
|
Partner
|
Retail Total
(Direct and Partner) |
|
Other
|
|
Consolidated
|
||||||||||
2017
|
|
|
|
|
|
|
|
|
|||||||||
Total net revenue
|
$
|
22,828
|
|
$
|
405,261
|
|
$
|
428,089
|
|
|
$
|
4,346
|
|
|
$
|
432,435
|
|
Cost of goods sold
|
20,963
|
|
321,297
|
|
342,260
|
|
|
3,268
|
|
|
345,528
|
|
|||||
Gross profit
|
$
|
1,865
|
|
$
|
83,964
|
|
$
|
85,829
|
|
|
$
|
1,078
|
|
|
$
|
86,907
|
|
Less: Sales and marketing expense
|
|
|
37,325
|
|
|
293
|
|
|
37,618
|
|
|||||||
Plus: Club O Rewards and gift card breakage (included in Other income (expense), net)
|
|
|
671
|
|
|
—
|
|
|
671
|
|
|||||||
Contribution
|
|
|
$
|
49,175
|
|
|
$
|
785
|
|
|
$
|
49,960
|
|
||||
Contribution margin
|
|
|
11.5
|
%
|
|
18.1
|
%
|
|
11.6
|
%
|
|||||||
|
|
|
|
|
|
|
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|||||||||
Total net revenue
|
$
|
26,651
|
|
$
|
384,269
|
|
$
|
410,920
|
|
|
$
|
2,757
|
|
|
$
|
413,677
|
|
Cost of goods sold
|
25,406
|
|
309,297
|
|
334,703
|
|
|
1,667
|
|
|
336,370
|
|
|||||
Gross profit
|
$
|
1,245
|
|
$
|
74,972
|
|
$
|
76,217
|
|
|
$
|
1,090
|
|
|
$
|
77,307
|
|
Less: Sales and marketing expense
|
|
|
31,311
|
|
|
145
|
|
|
31,456
|
|
|||||||
Plus: Club O Rewards and gift card breakage (included in Other income (expense), net)
|
|
|
4,169
|
|
|
—
|
|
|
4,169
|
|
|||||||
Contribution
|
|
|
$
|
49,075
|
|
|
$
|
945
|
|
|
$
|
50,020
|
|
||||
Contribution margin
|
|
|
11.9
|
%
|
|
34.3
|
%
|
|
12.1
|
%
|
|
|
Three months ended
March 31, |
|
Twelve months ended March 31,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net cash (used in) provided by operating activities
|
|
$
|
(23,097
|
)
|
|
$
|
(34,503
|
)
|
|
$
|
50,970
|
|
|
$
|
63,102
|
|
Expenditures for fixed assets, including internal-use software and website development
|
|
(11,344
|
)
|
|
(19,592
|
)
|
|
(64,033
|
)
|
|
(72,493
|
)
|
||||
Free cash flow
|
|
$
|
(34,441
|
)
|
|
$
|
(54,095
|
)
|
|
$
|
(13,063
|
)
|
|
$
|
(9,391
|
)
|
•
|
online retailers with or without discount departments, including Amazon.com, AliExpress (part of the Alibaba Group), eBay, and Rakuten.com (formerly Buy.com);
|
•
|
online specialty retailers such as Blue Nile, Bluefly, Houzz, Jet.com, Wayfair, Zappos.com, and Zulily;
|
•
|
private sale sites such as Groupon, Living Social and Rue La La;
|
•
|
furniture specialists including Ashley Furniture, Bob’s Discount Furniture, Havertys, Raymour & Flanigan and Rooms To Go;
|
•
|
traditional general merchandise and specialty retailers and liquidators including Barnes and Noble, Bed, Bath & Beyond, Best Buy, Costco Wholesale Corporation, Crate and Barrel, Ethan Allen, Gilt, Home Depot, HomeGoods, Hudson's Bay Company, IKEA, J.C. Penny Company, Kirkland's, Kohl's, Lands' End, Lowe's, Macy’s, Nordstrom, Pier 1 Imports, Pottery Barn, Restoration Hardware, Ross Stores, Saks Fifth Avenue, Sears Holding Corporation, T.J. Maxx, Target Corporation, Wal-Mart and Williams-Sonoma, all of which also have an online presence; and
|
•
|
liquidation e-tailers such as SmartBargains.
|
•
|
the need to develop new supplier and manufacturer relationships;
|
•
|
the need to comply with additional U.S. and foreign laws and regulations;
|
•
|
changes in international laws, regulatory requirements, taxes and tariffs;
|
•
|
our limited experience with different local cultures and standards;
|
•
|
geopolitical events, such as war and terrorist attacks;
|
•
|
the risk that the products we offer may not appeal to customers in international markets; and
|
•
|
the additional resources and management attention required for such expansion.
|
•
|
increases in the cost of advertising and changes in our sales and marketing expenditures;
|
•
|
expenses we incur in our Medici development efforts
|
•
|
our inability to retain existing customers or encourage repeat purchases;
|
•
|
the extent to which our existing and future marketing campaigns are successful;
|
•
|
price competition that results in losses or lower profit margins;
|
•
|
the amount and timing of operating costs and capital expenditures relating to the expansion of our business operations and infrastructure;
|
•
|
the amount and timing of our purchases of inventory;
|
•
|
our inability to manage distribution operations or provide adequate levels of customer service;
|
•
|
increases in the cost of fuel and transportation;
|
•
|
our ability to successfully implement technology changes or to integrate operations and technologies from acquisitions or other business combinations;
|
•
|
our efforts to offer new lines of products and services; and
|
•
|
our ability to attract users to our shopping and other sites.
|
•
|
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 (and our amended and restated certificate of incorporation prohibits cumulative voting in the election of directors);
|
•
|
mean that directors may be removed by the affirmative vote of the holders of the outstanding shares of common stock only “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;
|
•
|
establish advance notice requirements, including specific requirements as to the timing, form and content of a stockholder’s notice, for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings;
|
•
|
provide that special meetings of our stockholders may be called only by the board of directors, the chairman of the board, the chief executive officer or the president; and
|
•
|
provide that stockholders are permitted to amend the bylaws only with the approval of the holders of sixty-six and two-thirds percent (66-2/3%) of the voting power of outstanding capital stock entitled to vote at an election of directors.
|
Period
|
(a)
Total Number of Shares Purchased
|
|
(b)
Average Price Paid per Share
|
|
(c)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
(d)
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan
|
||||||
January 1, 2017 to January 31, 2017
|
604,229
|
|
|
$
|
16.55
|
|
|
604,229
|
|
|
$
|
15,000,000
|
|
February 1, 2017 to February 28, 2017
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
March 1, 2017 to March 31, 2017
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
604,229
|
|
|
|
|
604,229
|
|
|
$
|
15,000,000
|
|
(a)
|
|
Exhibits
|
|
|
|
|
*3.1
|
|
Amended and Restated Bylaws.
|
|
|
4.1
|
|
Registration Rights Agreement dated December 15, 2016 by and among Overstock.com, Inc. and Patrick M. Byrne, individually and as representative of each of the Participating Affiliates (as defined therein) (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on December 15, 2016 (File No. 000-49799)).
|
|
|
*4.2
|
|
Amendment No. 1 to Registration Rights Agreement effective March 10, 2017 by and among Overstock.com, Inc. and Patrick M. Byrne, individually and in his representative capacity.
|
|
|
4.3
|
|
First Amendment to Loan Agreement dated as of March 30, 2017 entered into by Overstock.com, Inc., O.com Land, LLC, U.S. Bank National Association and Compass Bank (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on April 4, 2017 (File No. 000-49799)).
|
(a)
|
|
Exhibits
|
|
|
|
|
4.4
|
|
Amended and Restated Revolving Note dated as of March 30, 2017 made by Overstock.com, Inc. to U.S. Bank National Association (incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed on April 4, 2017 (File No. 000-49799)).
|
|
|
4.5
|
|
Amended and Restated Revolving Note dated as of March 30, 2017 made by Overstock.com, Inc. to Compass Bank (incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K filed on April 4, 2017 (File No. 000-49799)).
|
|
|
4.6
|
|
Amendment to Deed of Trust, Assignment of Rents, Security Agreement and Financing Statement dated as of March 30, 2017 made by O.com Land, LLC to First American Title Insurance Company, as trustee, for the benefit of U.S. Bank National Association, as Administrative Bank for the Banks identified in the Loan Agreement described therein (incorporated by reference to Exhibit 4.4 to our Current Report on Form 8-K filed on April 4, 2017 (File No. 000‑49799)).
|
|
|
10.1
|
|
First Amendment to Loan Agreement dated as of March 30, 2017 entered into by Overstock.com, Inc., O.com Land, LLC, U.S. Bank National Association and Compass Bank (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on April 4, 2017 (File No. 000-49799)).
|
|
|
10.2
|
|
Amended and Restated Revolving Note dated as of March 30, 2017 made by Overstock.com, Inc. to U.S. Bank National Association (incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed on April 4, 2017 (File No. 000-49799)).
|
|
|
10.3
|
|
Amended and Restated Revolving Note dated as of March 30, 2017 made by Overstock.com, Inc. to Compass Bank (incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K filed on April 4, 2017 (File No. 000-49799)).
|
|
|
10.4
|
|
Amendment to Deed of Trust, Assignment of Rents, Security Agreement and Financing Statement dated as of March 30, 2017 made by O.com Land, LLC to First American Title Insurance Company, as trustee, for the benefit of U.S. Bank National Association, as Administrative Bank for the Banks identified in the Loan Agreement described therein (incorporated by reference to Exhibit 4.4 to our Current Report on Form 8-K filed on April 4, 2017 (File No. 000‑49799)).
|
|
|
10.5
|
|
Description of Overstock.com, Inc.’s oral agreement on January 27, 2017 to purchase 604,229 shares of its common stock from one or more subsidiaries of Fairfax Financial Holdings Limited at $16.55 per share, for an aggregate purchase price of $10 million (incorporated by reference to our Current Report on Form 8-K filed on January 30, 2017 (File No. 000-49799)).
|
|
|
10.6
|
|
O.com Land, LLC Term Note payable to the order of U.S. Bank National Association, dated January 1, 2017 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on January 5, 2017 (File No. 000-49799)).
|
|
|
10.7
|
|
O.com Land, LLC Term Note payable to the order of Compass Bank, dated January 1, 2017 (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on January 5, 2017 (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
|
|
Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Stockholders’ Equity, and (vi) Notes to Consolidated Financial Statements.
|
Date:
|
May 4, 2017
|
OVERSTOCK.COM, INC.
|
|
|
|
|
|
/s/ ROBERT P. HUGHES
|
|
|
Robert P. Hughes
|
|
|
Senior Vice President, Finance and Risk Management
(Principal Financial Officer and Principal Accounting Officer)
|
|
OVERSTOCK.COM, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ E. GLEN NICKLE
|
|
Name:
|
E. Glen Nickle
|
|
Title:
|
Vice President, Legal and acting General Counsel
|
|
PATRICK M. BYRNE
,
|
|
|
Individually and in his capacity as Representative of each of the Participating Affiliates
|
|
|
|
|
|
|
|
|
/s/ PATRICK M. BYRNE
|
|
|
Patrick M. Byrne
|
Date:
|
May 4, 2017
|
/s/ PATRICK M. BYRNE
|
|
|
Patrick M. Byrne
|
|
|
Chief Executive Officer
|
|
|
(principal executive officer)
|
Date:
|
May 4, 2017
|
/s/ ROBERT P. HUGHES
|
|
|
Robert P. Hughes
|
|
|
Senior Vice President, Finance and Risk Management
|
|
|
(principal financial officer)
|
Date:
|
May 4, 2017
|
/s/ PATRICK M. BYRNE
|
|
|
Patrick M. Byrne
|
|
|
Chief Executive Officer
|
|
|
(principal executive officer)
|
Date:
|
May 4, 2017
|
/s/ ROBERT P. HUGHES
|
|
|
Robert P. Hughes
|
|
|
Senior Vice President, Finance and Risk Management
|
|
|
(principal financial officer)
|