EX-99.1 2 a07-12283_1ex99d1.htm EX-99.1

 

 

 

Exhibit 99.1

 

 

 

 

 

NEWS RELEASE

 

 

 

 

Media Contact:

Jared Matkin, Overstock.com, Inc.

+1 (801) 947-3880

jmatkin@overstock.com

Investor Contact:

Kevin Moon, Overstock.com, Inc.

+1 (801) 947-3282

kmoon@overstock.com

Overstock.com Reports First Quarter 2007 Financial Results

SALT LAKE CITY (April 25, 2007) — Overstock.com, Inc. (NASDAQ: OSTK; www.overstock.com) today reported quarterly financial results for the period ending March 31, 2007:

·      Total revenue:  $157.9 million, down 11% from 2006

·      Gross profits:  $25.3 million, up 7% from 2006

·      Gross margin:  16.0% up from 13.3% in 2006

·      Sales and marketing expense:  $11.3 million, down 11% from 2006

·      Contribution (gross profit less marketing expense): $14.0 million, up 26% from $11.1 million in 2006

·      Contribution margin: 8.9% up from 6.2% in 2006

·      General and administrative expense:  $10.7 million, down 10% from 2006

·      Operating loss before restructuring charge (non-GAAP): $11.6 million, an 18% improvement from 2006

·      Operating loss: $17.7 million versus $14.2 million in 2006

·      Net loss: $21.4 million or $0.91 loss per share

Dear Owners:

Our business is dramatically improving.  Gross and contribution margins are expanding, and contribution dollars are up sharply.  G&A expenses are contracting.  That said, the corporate relocation to the warehouse remains uncertain: if we go forward with it, we will incur additional restructuring charges. I leave each to make her own determination regarding our results, look forward to our call, and as always, remain,

Your humble servant,

Patrick M. Byrne

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P.S. If you have any questions, please feel free to email them to Kevin Moon at kmoon@overstock.com before the conference call, so we may address them.

Key financial and operating metrics

Total revenue—Overstock.com reported total revenue for the three months ended March 31, 2007 of $157.9 million, an 11% decrease from the $178.0 million reported in 2006.

Gross profit and gross margin—Gross profit for the three months ended March 31, 2007 was $25.3 million (16.0% gross margin), a 7% increase from the $23.8 million (13.3% gross margin) reported in 2006.

Contribution and contribution margin—Contribution, defined as gross profit less sales and marketing expense, for the three months ended March 31, 2006 and 2007 was $11.1 million (6.2% contribution margin) and $14.0 million (8.9% contribution margin), respectively, a 26% increase.

 

 

Three months ended
March 31,

 

 

 

2006

 

2007

 

Total revenue

 

$

178,044

 

$

157,930

 

Cost of goods sold

 

154,290

 

132,615

 

 

 

 

 

 

 

Gross profit

 

23,754

 

25,315

 

Less: Sales and marketing expense

 

12,659

 

11,284

 

 

 

 

 

 

 

Contribution

 

$

11,095

 

$

14,031

 

Contribution margin

 

6.2

%

8.9

%

 

Operating loss—Operating loss for the three months ended March 31, 2006 and 2007 was $14.2 million and $17.7 million, respectively. Operating loss before restructuring was $14.2 million and $11.6 million for the three months ended March 31, 2006 and 2007, respectively.

 

 

Three months ended
March 31,

 

 

 

2006

 

2007

 

Operating loss

 

$

(14,179)

 

$

(17,720)

 

Add back: restructuring

 

—

 

6,089

 

 

 

 

 

 

 

Operating loss before restructuring

 

$

(14,179)

 

$

(11,631)

 

 

Net loss—Net loss for the three months ended March 31, 2007, was $21.4 million, or $0.91 loss per share, compared to $15.9 million, or $0.82 loss per share in 2006.  The 2007 net loss includes $6.1 million of restructuring charges and $3.6 million loss from

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discontinued operations.  The 2006 net loss did not have any restructuring charges, but included $0.8 million from discontinued operations.

Cash and working capital — Overstock.com had cash and cash equivalents of $68.1 million and working capital of $53.8 million at March 31, 2007.

# # #

About Overstock.com

Overstock.com, Inc. is an online “closeout” retailer offering discount, brand-name merchandise for sale over the Internet.  The company offers its customers an opportunity to shop for bargains conveniently, while offering its suppliers an alternative inventory liquidation distribution channel.  Overstock.com, headquartered in Salt Lake City, is a publicly traded company listed on the NASDAQ Global Market System and can be found online at http://www.overstock.com.

Overstock.com® is a registered trademark of Overstock.com, Inc.  All other trademarks are the property of their respective owners.

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, statements regarding the outlook of the company, as well as all such other risks as identified in our Form 10-K for the year ended December 31, 2006, and all our subsequent filings with the Securities and Exchange Commission, which contain and identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements.

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Overstock.com, Inc.

Consolidated Statements of Operations (unaudited)

(in thousands, except per share amounts)

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2006

 

2007

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

Direct

 

$

79,710

 

$

45,701

 

Fulfillment partner

 

98,334

 

112,229

 

 

 

 

 

 

 

Total revenue

 

178,044

 

157,930

 

 

 

 

 

 

 

Cost of goods sold

 

 

 

 

 

Direct

 

70,703

 

39,320

 

Fulfillment partner

 

83,587

 

93,295

 

 

 

 

 

 

 

Total cost of goods sold

 

154,290

 

132,615

 

 

 

 

 

 

 

Gross profit

 

23,754

 

25,315

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Sales and marketing

 

12,659

 

11,284

 

Technology

 

13,424

 

14,973

 

General and administrative

 

11,850

 

10,689

 

Restructuring

 

—

 

6,089

 

 

 

 

 

 

 

Total operating expenses

 

37,933

 

43,035

 

 

 

 

 

 

 

Operating loss

 

(14,179

)

(17,720

)

 

 

 

 

 

 

Interest income

 

315

 

990

 

Interest expense

 

(1,267

)

(1,029

)

 

 

 

 

 

 

Loss from continuing operations

 

(15,131

)

(17,759

)

Discontinued operations:

 

 

 

 

 

Loss from discontinued operations

 

(779

)

(3,624

)

 

 

 

 

 

 

Net loss

 

(15,910

)

(21,383

)

Deemed dividend related to redeemable common stock

 

(33

)

—

 

 

 

 

 

 

 

Net income (loss) attributable to common shares

 

$

(15,943

)

$

(21,383

)

 

 

 

 

 

 

Net loss per common share - basic and diluted:

 

 

 

 

 

Loss from continuing operations

 

$

(0.78

)

$

(0.75

)

Loss from discontinued operations

 

$

(0.04

)

$

(0.16

)

Net loss per common share - basic and diluted

 

$

(0.82

)

$

(0.91

)

Weighted average common shares outstanding - basic and diluted

 

19,385

 

23,594

 

 

 

 

 

 

 

Other data:

 

 

 

 

 

Shopping bookings (in 000s)

 

$

200,900

 

$

170,400

 

Auction gross merchandise volume (in 000s)

 

$

8,079

 

$

4,695

 

Average customer acquisition cost (shopping)

 

$

19.49

 

$

24.58

 

Average registrant acquisition cost (auctions)

 

$

2.94

 

$

0.35

 

 



Overstock.com, Inc.

Consolidated Balance Sheets (unaudited)

(in thousands, except per share amounts)

 

 

 

December 31,

 

March 31,

 

 

 

2006

 

2007

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

126,965

 

$

68,080

 

Accounts receivable, net

 

11,638

 

7,811

 

Notes receivable

 

6,702

 

2,761

 

Inventories, net

 

20,274

 

16,662

 

Prepaid inventory

 

2,241

 

2,601

 

Prepaid expenses

 

7,473

 

9,435

 

Current assets of held for sale subsidiary

 

4,718

 

2,148

 

 

 

 

 

 

 

Total current assets

 

180,011

 

109,498

 

Property and equipment, net

 

56,198

 

48,909

 

Goodwill

 

2,784

 

2,784

 

Other long-term assets, net

 

578

 

483

 

Long-term assets of held for sale subsidiary

 

16,594

 

12,805

 

 

 

 

 

 

 

Total assets

 

$

256,165

 

$

174,479

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

66,039

 

$

27,936

 

Accrued liabilities

 

40,142

 

22,976

 

Capital lease obligations, current

 

5,074

 

3,810

 

Current liabilities of held for sale subsidiary

 

3,684

 

993

 

 

 

 

 

 

 

Total current liabilities

 

114,939

 

55,715

 

Capital lease obligations, non-current

 

3,983

 

—

 

Convertible senior notes

 

75,279

 

75,365

 

 

 

 

 

 

 

Total liabilities

 

194,201

 

131,080

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock

 

2

 

2

 

Additional paid-in capital

 

325,771

 

327,399

 

Accumulated deficit

 

(198,694

)

(220,077

)

Treasury stock

 

(64,983

)

(63,778

)

Accumulated other comprehensive gain (loss)

 

(132

)

(147

)

 

 

 

 

 

 

Total stockholders’ equity

 

61,964

 

43,399

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

256,165

 

$

174,479

 

 

 



Overstock.com, Inc.

Consolidated Statements of Cash Flows (unaudited)

(in thousands)

 

 

 

Three months ended
March 31,

 

Twelve months ended
March 31,

 

 

 

2006

 

2007

 

2006

 

2007

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities of continuing operations:

 

 

 

 

 

 

 

 

 

Net loss

 

$

(15,910

)

$

(21,383

)

$

(36,518

)

$

(107,239

)

Adjustments to reconcile net loss to cash provided by (used in) operating activities of continuing operations:

 

 

 

 

 

 

 

 

 

Loss from discontinued operations

 

779

 

3,624

 

3,350

 

9,727

 

Depreciation and amortization

 

6,150

 

7,771

 

18,626

 

33,948

 

Realized (gain) loss from marketable securities

 

(217

)

—

 

3,135

 

(1,868

)

Loss on disposition of property and equipment

 

598

 

—

 

2,055

 

1

 

Stock-based compensation expense

 

958

 

1,073

 

1,010

 

4,235

 

Stock-based compensation to consultants for services

 

43

 

5

 

54

 

(15

)

Issuance of common stock from treasury

 

507

 

602

 

699

 

882

 

Amortization of debt discount and deferred financing fees

 

139

 

86

 

452

 

364

 

Restructuring

 

—

 

6,089

 

—

 

11,763

 

Gain from retirement of convertible senior notes

 

—

 

—

 

(6,158

)

—

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

2,316

 

3,827

 

(1,238

)

(541

)

Inventories, net

 

11,918

 

3,612

 

(31,223

)

58,703

 

Prepaid inventory

 

794

 

(360

)

1,068

 

6,234

 

Prepaid expenses

 

(1,894

)

(1,962

)

(614

)

936

 

Other long-term assets

 

47

 

90

 

(1,490

)

539

 

Accounts payable

 

(63,621

)

(38,059

)

(4,211

)

(9,638

)

Accrued liabilities

 

(15,185

)

(23,255

)

7,537

 

(19,986

)

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

(72,578

)

(58,240

)

(43,466

)

(11,955

)

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities of continuing operations:

 

 

 

 

 

 

 

 

 

Change in restricted cash

 

198

 

—

 

957

 

55

 

Purchases of marketable securities

 

(100

)

—

 

(59,699

)

—

 

Sales of marketable securities

 

7,281

 

—

 

164,284

 

49,475

 

Expenditures for property and equipment

 

(6,804

)

(477

)

(38,416

)

(17,114

)

Proceeds from the sale of property and equipment

 

—

 

—

 

—

 

1

 

Acquisition of Ski West (net of cash acquired)

 

—

 

—

 

(25,111

)

—

 

Paydown of note receivable

 

—

 

3,941

 

—

 

3,941

 

Decrease in cash resulting from de-consolidation of variable entity

 

—

 

—

 

—

 

(102

)

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) investing activities

 

575

 

3,464

 

42,015

 

36,256

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities of continuing operations:

 

 

 

 

 

 

 

 

 

Payments on capital lease obligations

 

(2,428

)

(5,247

)

(9,363

)

(5,776

)

Borrowings on line of credit

 

30,728

 

1,169

 

42,596

 

57,122

 

Payments on line of credit

 

(10,728

)

(1,169

)

(22,596

)

(77,122

)

Payments to retire convertible senior notes

 

—

 

—

 

(35,670

)

—

 

Proceeds from the issuance of common stock

 

—

 

—

 

—

 

64,406

 

Purchase of treasury stock

 

—

 

—

 

(24,133

)

—

 

Settlement of call options for cash

 

—

 

—

 

7,937

 

—

 

Exercise of stock options

 

1,027

 

1,153

 

7,436

 

2,660

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) financing activities

 

18,599

 

(4,094

)

(33,793

)

41,290

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

15

 

(15

)

119

 

4

 

Cash provided by (used in) operating activities of discontinued operations

 

(176

)

410

 

(221

)

2,167

 

Cash provided by (used in) investing activities of discontinued operations

 

(41

)

(53

)

(139

)

(578

)

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

(53,606

)

(58,528

)

(35,485

)

67,184

 

Change in cash and cash equivalents from discontinued operations

 

217

 

(357

)

360

 

(1,590

)

Cash and cash equivalents, beginning of period

 

55,875

 

126,965

 

37,611

 

2,486

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

2,486

 

$

68,080

 

$

2,486

 

$

68,080